Whatever comes to mind!

May 30, 2011

As you have no doubt heard, today. Germany formally announced its decision to shut down ALL of its 17 nuclear power reactors by 2022. The 7-8 reactors shut-down after the Japan disaster in March will not be reactivated. Within the next 10 years, the country intends to get 40% (vs. 17% today) of its total electricity production from renewable energy alternatives, e.g., wind and solar.

This momentous societal strategic reversal "bottom-up" contrasts with Kenneth Arrow's disputable theory that a social system cannot come up with decisions for the general well-being of the greatest number of people. The multi-party systems in the mature countries of Europe insure a more democratic, economic balanced response and choice to social-economic issues compared to America's "winner takes all culture" .... where social choice for the greatest good of all citizens gets politicized to a kind of "decadent political nihilism-war game" resulting in a leadership compromised nothingness that makes critically needed fundamental, strategic change for the common good beyond reach .... thereby fulfilling Arrow's limited social-choice theory where aggregate individual preferences/values based more on rational/ethical criteria, as opposed to largely fear-induced, emotional criteria, are impossible.

When I was 11, my family moved south from Mars Hill in Aroostook County, Maine to Portland, Maine. An old, excellent, unconventional newspaper there is the Portland Press Herald. This paper recently published a very complete article on Germany's determination (and reasoning) to stop with nuclear energy. The article is entitled, "Germany To Stop With Nuclear Power." I thought you might find it informative.

Europe is also leaving the U.S. in the dust when it comes to taking concrete actions about short and long-term deficit/debt growth. An excellent study of the world debt problem by Joseph E. Gagnon of the Peterson Institute for International Economics concludes, to the surprise of the mis- or underinformed, that Europe's outlook is far better than America's as far as debt levels are concerned. The report, "The Global Outlook forGovernment Debt Over the Next 25 Years: Implications for the Economy and Public Policy," forecasts the dangerous, unbearable government debt levels certain to happen under best and worst case scenarios in 2035. Hold onto your seatbelt!

FORECAST 2035

TODAYBest CaseWorst Case

Debt As % of GDP #

United States 65% 155% 302%

Europe 67% 72% 155%

The differences are because some EU countries have already taken actions on fiscal problems by undertaking spending cuts and tax increases as well as adustments to long-term pensions by raising the retirement age.

Debt problems today are ominously far more simultaneously widespead than ever witnessed since WWII. In the report´s plain words:

"It is unique in peacetime for so many nations to have so much debt. That government debt will grow to dangerous and unsustainable levels in most advanced countries and many emerging countries over the next 25 years -- if there are no changes in current tax rates, government benefit programs in retirement and health care -- is virtually beyond dispute."

In so many words, the authors say that the structurally high job unemployment and underemployment levels form the immediate crisis ... that we have a little more time to confront the severe structural fiscal problems related to Social Security/Medicare and need for added taxes. But a fiscal crisis is certain if U.S. policy makers continue to bicker, stall and do nothing unlike their European counterparts whose prompt actions tend to give corporations and small businesses near-term confidence to invest in jobs.

In one analyst's words, the Joseph Gagnon report on our nation's debt trends and policy implications of same is "straighttalk when vitally needed on a critical topic."

While the United States remains utterly frozen in a debate about budget deficits and all the things that government shouldn’t do, other countries are marrying public and private resources to make themselves stronger and more competitive.

While the United States is not even sure we should have gone halfway toward providing health insurance to all of our citizens, other democratic countries long ago began using government to cover all their citizens — and have health costs far lower than ours.

While other countries have jumped ahead of us in green economics, we have backed away from any effort to put a price on carbon to battle climate change and promote new technologies. In the Republican Party, politicians have to apologize for even thinking about global warming.

And while other countries invest in their basic facilities, we are letting our broadband access, roads and bridges, and rail and water systems go to seed. We created the interstate highway system, and now we can’t maintain our sewers.

Okay, now you can go back to the dreary deficit debate if you wish, but this catalogue is offered to suggest the irrelevance of Washington’s conversation to the problems the country faces.

Our imagination deficit is the shortfall we should worry about. We seem incapable of doing what we did in the Truman, Eisenhower, Kennedy, Johnson and, yes, Nixon years: imagining how practical public action could make our citizens’ lives better, our country stronger and our private economy more productive.

Sure, we need long-term fiscal balance, and going back to and then reforming the tax rates we had under Bill Clinton would accomplish much of what’s necessary. The rest could be accomplished with far more modest reductions than the draconian cuts in Rep. Paul Ryan’s plan.

The larger and more important challenge is to figure out how we can plan, invest and compete with countries far more focused than we are on how the new global economy works. And the people most amazed at our country’s inability to do so are not armchair socialists but tough-minded chief executives.

Encouraged by Carl Pope of the Sierra Club, I spent time recently with the Wall Street Journal’s report on its annual ECO:nomics conference, published in March. Right off, the Journal’s account emphasized that China is “grabbing clean-technology market share not because of its cheap labor . . . but through strong mandates and subsidies to build a new export industry.” Ahem, those words “mandates” and “subsidies” don’t come out of the free-market playbook.

The report quoted Mark Pinto, executive vice president of Applied Materials, who said that in solar power, the United States is “neither the largest in manufacturing nor the largest market.” He added: “That’s very unusual.” Do we really want to lose this market?

On his blog, Pope cites another corporate leader who attended the conference, Andrew N. Liveris, the chairman and chief executive of Dow Chemical. “Around the world,” Liveris writes in his book “Make It in America,” “countries are acting more and more like companies: competing aggressively against one another for business and progress and wealth. . . . Meanwhile, in the United States, we operate as if little has changed.”

I won’t pretend to agree with all of the chief executives’ views on tax or regulatory policy. But it is striking that so many of them are pragmatists, not ideologues. They understand that government efforts to promote national prosperity need to go way beyond taxes and deficits.

You might recall an observant politician who noted this year that “South Korean homes now have greater Internet access than we do. Countries in Europe and Russia invest more in their roads and railways than we do. China is building faster trains and newer airports. Meanwhile, when our own engineers graded our nation’s infrastructure, they gave us a ‘D.’ ”

A few months later, the same politician said: “We don’t have to choose between a future of spiraling debt and one where we forfeit investment in our people and our country.”

That would be President Obama, and you wonder: Is there any chance that he can move our national conversation to the task of “winning the future”?

May 29, 2011

AMSTERDAM (Reuters) – The Dutch government on Friday said it would start banning tourists from buying cannabis from "coffee shops" and impose restrictions on Dutch customers by the end of the year.

The Netherlands is well known for having one of Europe's most liberal soft drug policies that has made its cannabis shops a popular tourist attraction, particularly in Amsterdam.

Backed by the far-right party of anti-immigrant politician Geert Wilders, the coalition government that came into power last year announced plans to curb drug tourism as part of a nationwide program to promote health and fight crime.

"In order to tackle the nuisance and criminality associated with coffee shops and drug trafficking, the open-door policy of coffee shops will end," the Dutch health and justice ministers wrote in a letter to the country's parliament on Friday.

Under the new rules, only Dutch residents will be able to sign up as members of cannabis shops.

Dutch customers will have to sign up for at least a year's membership and each shop would be expected to have only up to 1,500 members, a justice ministry spokesman said.

The policy will roll out in the southern provinces of Limburg, Noord Brabant and Zeeland by the end of the year and the rest of the country next year, the spokesman said.

Amsterdam, home to about 220 coffee shops, is already in the process of closing some in its red light district. Some officials have resisted the measures, saying they will push the soft drug trade underground.

Some Dutch border towns including Maastricht and Terneuzen have already restricted the sale of marijuana to foreigners.

America’s Right – from the NFL lockout to Rep. Paul Ryan’s budget – side with the billionaires in what amounts to an escalating class war against the middle class and the poor

If American football fans end up facing a fall without NFL games, they probably won’t blame George W. Bush and other Republican presidents for packing the federal courts with right-wing judges, but it was two Bush appointees who reversed a District Court ruling that would have ended the lockout of players.

The Appeals Court judgment encouraged the NFL’s hardline billionaire owners to resist making the kinds of compromises that a few less intransigent owners recognize could easily resolve the impasse.

Now, the hardliners simply assume that Republican judges will keep siding with the NFL owners and thus enable them to beat down the players, eventually assuring the billionaire owners a bigger piece of the revenue pie – even if that means losing some or all of the 2011 season.

What many average Americans, especially white guys, don’t seem to understand is that whatever the populist-styled rhetoric of Fox News or Rush Limbaugh, the Right’s default position is to side with the billionaires – and to show little or no regard for the fate of anyone else, whether NFL players or sick senior citizens.

Still, one must give the Right credit for having worked hard refining how to phrase its arguments. Right-wingers even have turned the term “class warfare” against the Left by shouting the phrase in a mocking fashion whenever anyone tries to blunt the “class warfare” that the billionaires have been waging against the middle class and the poor for decades.

On right-wing TV and talk radio across the country, there are tag teams of macho men pretending that ”class warfare” exists only in the fevered imagination of the Left. But billionaire investor Warren Buffett has acknowledged the truth: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”

The right-wing propagandists further earn their keep by disparaging science as “elitist.” So, even as the dire predictions from climate-change experts that global warming will generate more extreme weather seem to be coming true, many Americans who have listened to the “climate-change-deniers” for years still reject the scientific warnings.

While no single weather event can be connected to the broader trend of climate change, the warnings about what might happen when the earth’s atmosphere heats up and absorbs more moisture seem to be applicable to the historic flooding in some parts of the world, droughts in others, and the outbreak of particularly violent storms.

Heat and moisture are especially dangerous ingredients for hurricanes and tornados.

Ironically, the parts of the United States hardest hit by this severe weather are those represented predominately by Republicans who have been at the forefront of obstructing government efforts to address the global-warming crisis.

Flooding, hurricanes and tornados have inflicted horrendous damage on Mississippi, Alabama, Louisiana, Texas, Tennessee, Missouri and Oklahoma – all part of the Republican base.

God’s Punishment?

If televangelist Pat Robertson were a left-winger instead of a right-winger, he might be saying that God is punishing these “red states” for doubting the science of global warming.

However, even as the U.S. news obsesses over the violent weather, mainstream media stars have steered clear of whether global warming might be a factor. It’s as if they know that they’d only be inviting career-damaging attacks from the Right if they did anything to connect the dots.

The Right also is not eager to explain how these catastrophes will require emergency funding and rebuilding assistance from the federal government. After all, you don’t want Republican voters to understand that sometimes “self-reliance” alone doesn’t cut it; sometimes, we all need help and the government must be part of that assistance.

In the case of the killer tornado that devastated Joplin, Missouri, House Republicans, without a hint of irony, are extracting the funds for disaster relief from green energy programs, which remain a favorite GOP target since many Republicans still insist there is no such thing as global warming.

At both state and national levels, Republican leaders have lined up behind climate-change deniers, with former Minnesota Gov. Tim Pawlenty just the latest GOP presidential hopeful to apologize for his past support of a cap-and-trade system aimed at reducing global-warming gases.

Any serious move toward alternative energies would, of course, be costly to the giant oil companies and their billionaire owners, like David Koch of Koch Industries who has spent millions of dollars funding right-wing organizations, such as the Tea Party. The Right’s media/political operatives know better than to bite the hand that feeds them.

GOP orthodoxy also disdains tax increases on the rich or even elimination of tax breaks for the oil industry. The Republican insistence on low tax rates for the wealthy, in turn, has forced consideration of other policy proposals to achieve savings from services for average Americans.

That is why congressional Republicans have targeted Medicare with a plan that would end the current health program for the elderly and replace it with a scheme that would give subsidies to senior citizens who would then have to sign up for health insurance from private industry, which has proven itself far less efficient in providing health care than the government.

The GOP budget, drafted by House Budget Committee Chairman Paul Ryan of Wisconsin, would impose the Medicare changes on seniors beginning in 10 years.

Most attention on the Ryan plan has focused on estimates that it would cost the average senior citizen more than $6,000 extra per year, but the proposal also has the effect of privatizing Medicare, meaning that the government would make direct “premium support” payments to profit-making insurance companies whose interest is in maximizing profits, not providing the best possible care for old people.

While the Ryan plan would achieve budget “savings” by shifting the burden of health-care costs onto the elderly, Ryan’s budget also would lower tax rates for the wealthiest Americans even more, from 35 percent to 25 percent. Partly because of that tax cut, Ryan’s budget would still not be balanced for almost three decades.

Class Warfare

Thus, the battle lines of America’s “class warfare” are getting more sharply drawn. The conflict is now over the Right’s determination to concentrate even more money and power in the hands of the rich by hobbling any government capability to protect the people’s general welfare.

If the Right wins, individual Americans will be left essentially defenseless in the face of unbridled corporate power.

Ryan’s Medicare plan may be just the most striking example because it envisions sick old people trying to pick their way through a thicket of private insurance plans with all their confusing language designed to create excuses for denying coverage. It is not an exaggeration to say that Ryan’s tight-fisted Medicare plan could consign millions of Americans to a premature death.

The Right’s priorities hit home at a town hall meeting held by Rep. Rob Woodall, R-Georgia, when he chastised one of his constituents who worried that Ryan’s plan would leave Americans like her, whose employer doesn’t extend health benefits to retirees, out of luck.

“Hear yourself, ma’am. Hear yourself,” Woodall lectured the woman. “You want the government to take care of you, because your employer decided not to take care of you. My question is, ‘When do I decide I’m going to take care of me?’”

However, another constituent noted that Woodall accepted government-paid-for health insurance for himself.

“You are not obligated to take that if you don’t want to,” the woman said. “Why aren’t you going out on the free market in the state where you’re a resident and buy your own health care? Be an example. …

“Go and get it in a single-subscriber plan, like you want everybody else to have, because you want to end employer-sponsored health plans and government-sponsored health plans. … Decline the government health plan and go to Blue Cross/Blue Shield or whoever, and get one for yourself and see how tough it is.”

Woodall answered that he was taking his government health insurance “because it’s free. It’s because it’s free.”

Self-reliance, it seems, is easier to preach to others than to practice yourself.

Woodall’s explanation recalled the hypocrisy of free-market heroine Ayn Rand, whom Rep. Ryan has cited as his political inspiration. In her influential writings, Rand ranted against social programs that enabled the “parasites” among the middle-class and the poor to sap the strength from the admirable rich, but she secretly accepted the benefits of Medicare after she was diagnosed with lung cancer.

A two-pack-a-day smoker, Rand had denied the medical science about the dangers of cigarettes, much as her acolytes today reject the science of global warming. However, when she developed lung cancer, she connived to have Evva Pryor, an employee of Rand’s law firm, arrange Social Security and Medicare benefits for Ann O’Connor, Ayn Rand using her husband’s last name.

In 100 Voices: An Oral History of Ayn Rand, Scott McConnell, founder of the Ayn Rand Institute’s media department, quoted Pryor as saying: “Doctors cost a lot more money than books earn and she could be totally wiped out.”

So, when push came to shove, even Ayn Rand wasn’t above getting help from the “despised government.” However, her followers, including Rep. Ryan, now want to strip those guaranteed benefits from other Americans of more modest means than Ayn Rand.

It seems it’s okay for average Americans to be wiped out.

Hypocrisy, Hypocrisy

While the Right’s penchant for hypocrisy is well-known (note how many Republicans involved in the impeachment of President Bill Clinton had their own extra-marital affairs), the bigger mystery is why so many average-guy Americans volunteer to fight for the rich in the trenches of the Right’s class warfare.

Clearly, the Right’s propaganda with its endless repetition is very effective, especially given the failure of the American Left to invest significantly in a competing message machine. The Right also has adopted the tone of populism, albeit in support of a well-to-do economic elite.

Yet, perhaps most importantly, the Right has stuck with its battle plan for rallying a significant percentage of middle-class Americans against their own interests.

Four decades ago, President Richard Nixon and his subordinates won elections by demonizing “hippies,” “welfare queens” and the “liberal media.”

Then, in the late 1970s, a tripartite coalition took shape consisting of the Republican Establishment, neoconservatives and the leaders of the Christian Right. Each group had its priorities.

The rich Republicans wanted deep tax cuts and less business regulation; the neocons wanted big increases in military spending and a freer hand to wage wars; and the Christian Right agreed to supply political foot soldiers in exchange for concessions on social issues, such as abortion and gay rights. Ultimately, each part of the coalition got a chunk of what it wanted.

From Ronald Reagan to George W. Bush, the rich got their taxes slashed, saw regulations rolled back and gained a larger share of the nation’s wealth and political power. The neocons got massive military spending and the chance to dispatch U.S. soldiers to kill Israel’s Muslim enemies. The Christian Right got help in restricting abortions and punishing gays.

But what did the American middle-class get?

Over those three decades, the middle-class has stagnated or slipped backward. Labor unions were busted; jobs were shipped overseas; personal debt soared; education grew more expensive, along with medical care. People were working harder and longer – for less. Or they couldn’t find jobs at all.

With today’s Tea Party and the Ryan budget, the Right’s coalition is staying on the offensive. If the House budget were passed in total, tax rates for the rich would be reduced another 10 percentage points; military spending would remain high to please the neocons (who foresee a possible war with Iran); and Planned Parenthood and other pet targets of the Christian Right would be zeroed out.

Yet, with the proposed elimination of traditional Medicare, the Ryan budget has lifted the curtain on what the Right’s “free market” has in mind for most average Americans, who could expect to find their lives not only more brutish but shorter.

The real-life-and-death consequences of the Right’s tax cuts, military spending and culture wars are finally coming into focus. If you’re not rich – and can’t afford to pick up the higher tab on health care – you’re likely to die younger. Or your kids might have to dig into their pockets to help you out.

Less extreme but still troubling, another consequence of the Right’s remarkable success over the past three decades might become apparent on your TV screens this fall.

Thanks to all those right-wing judges packed onto federal appeals courts by Reagan and the two Bushes, American football fans might not have the NFL to watch.

The NFL’s lockout of its players seemed to be ending several weeks ago when a lower-court judge ruled against the billionaire owners, but the NFL’s lawyers confidently filed an appeal to a three-judge panel on the Eighth Circuit, knowing that they would surely get one dominated by Republican judges.

They did. Steven Colloton and Duane Benton, two Republicans appointed by George W. Bush, constituted the majority on the panel and reflexively sided with the NFL’s owners.

The ruling should have surprised no one. After all, the Right’s default position is almost always to side with the billionaires.

The idea that we need a “new economy”—that the entire economic system must be radically restructured if critical social and environmental goals are to be met—runs directly counter to the American creed that capitalism as we know it is the best, and only possible, option. Over the past few decades, however, a deepening sense of the profound ecological challenges facing the planet and growing despair at the inability of traditional politics to address economic failings have fueled an extraordinary amount of experimentation by activists, economists and socially minded business leaders. Most of the projects, ideas and research efforts have gained traction slowly and with little notice. But in the wake of the financial crisis, they have proliferated and earned a surprising amount of support—and not only among the usual suspects on the left. As the threat of a global climate crisis grows increasingly dire and the nation sinks deeper into an economic slump for which conventional wisdom offers no adequate remedies, more and more Americans are coming to realize that it is time to begin defining, demanding and organizing to build a new-economy movement.

That the term “new economy” has begun to explode into public use in diverse areas may be an indication that the movement has reached a critical stage of development—and a sign that the domination of traditional thinking may be starting to weaken. Although precisely what “changing the system” means is a matter of considerable debate, certain key points are clear: the movement seeks an economy that is increasingly green and socially responsible, and one that is based on rethinking the nature of ownership and the growth paradigm that guides conventional policies.

This, in turn, leads to an emphasis on institutions whose priorities are broader than those that typically flow from the corporate emphasis on the bottom line. At the cutting edge of experimentation are the growing number of egalitarian, and often green, worker-owned cooperatives. Hundreds of “social enterprises” that use profits for environmental, social or community-serving goals are also expanding rapidly. In many communities urban agricultural efforts have made common cause with groups concerned about healthy nonprocessed food. And all this is to say nothing of 1.6 million nonprofit corporations that often cross over into economic activity.

For-profits have developed alternatives as well. There are, for example, more than 11,000 companies owned entirely or in significant part by some 13.6 million employees. Most have adopted Employee Stock Ownership Plans; these so-called ESOPs democratize ownership, though only some of them involve participatory management. W.L. Gore, maker of Gore-Tex and many other products, is a leading example: the company has some 9,000 employee-owners at forty-five locations worldwide and generates annual sales of $2.5 billion. Litecontrol, which manufactures high-efficiency, high-performance architectural lighting fixtures, operates as a less typical ESOP; the Massachusetts-based company is entirely owned by roughly 200 employees and fully unionized with the International Brotherhood of Electrical Workers.

A different large-scale corporation, Seventh Generation—the nation’s leader in “green” detergents, dishwashing soap, baby wipes, tissues, paper towels and other household products—has internal policies requiring that no one be paid more than fourteen times the lowest base pay or five times higher than the average employee.

In certain states, companies that want to brandish their new-economy values can now also register as B Corporations. B Corp registration (the “B” stands for “benefit”) allows a company to subordinate profits to social and environmental goals. Without this legal authorization, a CEO could in theory be sued by stockholders if profit-making is not his sole objective. Such status ensures that specific goals are met by different companies (manufacturers have different requirements from retail stores). It also helps with social marketing and branding. Thus, King Arthur Flour, a highly successful Vermont-based, 100 percent employee-owned ESOP, can be explicit, stating that “making money in itself is not our highest priority.” Four states—Maryland, Vermont, New Jersey and Virginia—have passed legislation that permits B Corp chartering, with many others likely to follow.

Cooperatives may not be a new idea—with at least 130 million members (more than one in three Americans), co-ops have broad political and cultural support—but they are becoming increasingly important in new-economy efforts. A widely discussed strategy in Cleveland suggests a possible next stage of development: the Evergreen Cooperatives are linked through a nonprofit corporation, a revolving loan fund and the common goal of rebuilding the economically devastated Greater University Circle neighborhoods. A thoroughly green industrial-scale laundry, a solar installation company and a soon-to-be-opened large-scale commercial greenhouse (capable of producing about 5 million heads of lettuce a year) make up the first of a group of linked co-ops projected to expand in years to come. The effort is unique in that Evergreen is building on the purchasing power of the area’s large hospital, university and other anchor institutions, which buy someâ€¨$3 billion of goods and services a year—virtually none of which, until recently, had come from local business. Senator Sherrod Brown is expected to introduce national legislation aimed at developing Evergreen-style models in other cities. (Full disclosure: the Democracy Collaborative of the University of Maryland, which I co-founded, has played an important role in Evergreen’s development.)

* * *

Along with the rapid expansion of small and medium-size businesses committed to building the new economy has come a sense of community and shared mission. Staff, managers and owners at many of these companies are finding more opportunities to share ideas and pool resources with like-minded professionals. The American Sustainable Business Council, a growing alliance of 150,000 business professionals and thirty business organizations, has emerged as a leading venue for such activity. Most members are “triple bottom line” companies and social enterprises committed to the environment and social outcomes as well as profits.

In many ways the council operates like any advocacy group attempting to lobby, educate and promote legislation and strategies. Thirty-five leaders recently met with Labor Secretary Hilda Solis, for instance, to make clear that the US Chamber of Commerce does not speak for all American business, to seek her help with specific projects and issues, and to fill her in on a range of environmentally and socially concerned economic efforts that definitely do not do business as usual. The names of some of the council’s constituent organizations offer a sense of what this means: Green America, Business for Shared Prosperity, Social Enterprise Alliance, Count Me In for Women’s Economic Independence, California Association for Microenterprise Opportunity. Although ecological concerns are at the top, the council’s agenda is highly supportive of other progressive social and economic goals. A recent blog by Jeffrey Hollender, chair of the council’s advisory board (and former CEO of Seventh Generation), attacked the US Chamber of Commerce for “fighting democracy and destroying America’s economic future.”

The Business Alliance for Local Living Economies (BALLE), made up of more than 22,000 small businesses, is another rapidly growing organization that works to strengthen new-economy networks. BALLE brings together locally owned efforts dedicated to building ecologically sustainable “living economies,” with the ambitious long-term goal of developing a global system of interconnected local communities that function in harmony with their ecosystems. The group’s Mid-Atlantic Regional Hub, the Sustainable Business Network of Greater Philadelphia, recognizes area businesses that “demonstrate a strong social and environmental impact while also making a profit.” A recent example is GreenLine Paper, a company that produces green products and works to preserve forests and prevent climate change. By participating in the network, GreenLine Paper gains brand recognition and promotion, as well as marketing, policy support, technical assistance and access to a like-minded coalition of businesses.

Sarah Stranahan, a longtime board member at the Needmor Fund, recalls having a sense in late 2009 that large numbers of Americans were beginning to understand that something is profoundly wrong with the economy. Bearing this in mind, with a small group of other activists she brought leaders of diverse organizations together in early September of that year to explore ways to build a larger movement. The New Economy Network (NEN), a loosely organized umbrella effort comprising roughly 200 to 250 new-economy leaders and organizations, was the low-budget product of their meeting. NEN acts primarily as a clearinghouse for information and research produced by member organizations. “However, our most important role,” says Stranahan, who serves as the network coordinator, “has been to help create a larger sense of shared common direction in a time of crisis—a sense that the new-economy movement is much greater than the sum of its diverse parts.”

* * *

Several initiatives have begun to deal systematically with fundamental problems of vision, theory and longer-term strategy. The New Economics Institute (NEI), which is in formation, is a joint venture that brings together the former E.F. Schumacher Society and the New Economics Foundation, in Britain. Among the environmentalists and economists involved are Gus Speth, David Orr, Richard Norgaard, Bill McKibben, Neva Goodwin, John Fullerton and Peter Victor.

“For the most part, advocates for change have worked within the current system of political economy,” says Speth, a former adviser to Presidents Carter and Clinton, onetime administrator of the United Nations Development Programme and the recently retired dean of the Yale School of Forestry and Environmental Studies, who has emerged as one of the new-economy movement’s leading figures. “But in the end,” Speth declares, “this approach will not succeed when what is needed is transformative change in the system itself.”

NEI is teaming up with other organizations, like the progressive think tank Demos, on several projects. One shared effort is attempting to develop detailed indicators of sustainable economic activity. As many scholars have demonstrated, the gross national product indicator is profoundly misleading: for instance, both work that generates pollution and work that cleans it up are registered as positive in the GNP, although the net real-world economic gain is zero, and there is a huge waste of labor on both sides of the effort. Precisely how to develop a “dashboard” of indicators that measure genuine economic gain, environmental destruction, even human happiness is one of NEI’s high priorities. Another is a detailed econometric model of how a very large economic system can move away from growth as its central objective. Related to both are earlier and ongoing Great Transition studies by the Tellus Institute, a think tank concerned with sustainability.

* * *

A less academic effort concerned with vision and long-term institutional and policy reform is the New Economy Working Group, a joint venture of the Institute for Policy Studies (IPS) and YES! Magazine. Among other things, the working group (which includes people, like Speth, who are concurrently involved in other initiatives) is attempting to create detailed designs for state and local banks in support of new-economy institutional development. (The longstanding Bank of North Dakota is one important precedent.) The larger goal of the Working Group is to advance a coherent vision of an economy organized around sustainable local community economies. John Cavanagh, on leave as director of IPS, and his wife, Robin Broad, a professor of international development at American University, emphasize the importance to developing nations of communities that provide economic, social and environmental “rootedness” in an “age of vulnerability.” David Korten, board chair of YES! Magazine and author of Agenda for a New Economy, stresses a radically decentralized domestic free-market vision of “self-organizing” communities that rely almost entirely on local resources. He envisions a trajectory of cultural change that could not only reduce conventionally defined economic growth but even reverse it—in part to make up for past ecological and resource destruction, and also to deal with global warming.

It is possible, even likely, that the explosion and ongoing development of institutional forms, along with new and more aggressive advocacy, will continue to gather substantial momentum as economic and ecological conditions worsen. It is by no means obvious, however, how even a very expansive vision of such trends would lead to “systemic” or “transformative” change. Moreover, different new-economy advocates are clearly divided on matters of vision and strategy. Speth, for instance, sees far-reaching change as essential if the massive threat posed by climate change is ever to be dealt with; he views the various experiments as one vector of development that may help lay groundwork for more profound systemic change that challenges fundamental corporate priorities. Others, like David Levine, executive director of the American Sustainable Business Council, emphasize more immediate reforms and stress the need for a progressive business voice in near-term policy battles. What to do about the power of large private or public corporations in the long term is an unresolved question facing all parties.

* * *

Obviously, any movement that urges changing the system faces major challenges. Apart from the central issue of how political power might be built over time, three in particular are clearly daunting: first, many new-economy advocates concerned about global warming and resource limits hold that conventionally defined economic growth must be slowed or even reversed. In theory an economic model that redistributes employment, consumption and investment in a zero- or reduced-growth system is feasible, but it is a very hard sell in times of unemployment, and it is a direct challenge to the central operating principle of the economic system. It is also a challenge to the priorities of most elements of the progressive coalition that has long based its economic hopes on Keynesian strategies aimed at increasing growth.

A related problem concerns the labor movement. Many new-economy advocates hold progressive views on most issues of concern to labor. In a recent letter supporting progressives in Wisconsin, for instance, the American Sustainable Business Council wrote that “eliminating collective bargaining is misguided, unsustainable and the wrong approach to solving deeper, more systemic economic issues”—hardly the standard Chamber of Commerce point of view! Still, the ultimate goal of reducing growth is incompatible with the interests of most labor leaders.

Although there have been tentative off-the-record explorations of how to narrow differences among groups, no direction for agreement has emerged. That some cooperation is possible is clear, however, from common efforts in support of “green jobs,” such as the Apollo Alliance (which aims to create 5 million “high-quality, green-collar jobs” over the coming ten years) and the BlueGreen Alliance, a partnership of major labor and environmental groups dedicated to expanding the quality and availability of green jobs. IPS director Cavanagh is working with a small group of theorists and activists on a plan for green jobs that attempts to integrate new-economy concerns with those of labor and other progressive groups, and to link the expanding local efforts with traditional national strategies.

A further line of possible long-term convergence is new interest by the United Steelworkers in alternative forms of economic enterprise—and, importantly, larger-scale efforts. The Steelworkers signed an agreement with the Mondragon Corporation in 2009 to collaborate in establishing unionized cooperatives based on the Mondragon model in manufacturing here and in Canada. (Mondragon, based in the Basque region of Spain, has nearly 100,000 workers and is one of the largest and most successful cooperative enterprises in the world.)

A third and very different challenge is presented by traditional environmental organizations. Speth, a board member of the Natural Resources Defense Council, has found very little willingness among his fellow board members to discuss system-changing strategies, even if understood as long-term developmental efforts. The traditional organizations spend most of their time trying to put out fires in Washington, he notes, and have little capacity to stand back and consider deeper strategic issues—particularly if they involve movement building and challenges to the current orthodoxy.

* * *

For all the difficulties and despite the challenges facing progressive politics, there are reasons to think that new-economy efforts have the capacity to gather momentum as time goes on. The first is obvious: as citizen uprisings from Tunisia to Madison, Wisconsin, remind us, judgments that serious change cannot take place often miss the quiet buildup of potentially explosive underlying forces of change. Nor were the eruptions of many other powerful movements—from late-nineteenth-century populism to civil rights to feminism and gay rights—predicted by those who viewed politics only through the narrow prism of the current moment.

Many years ago, I was legislative director to Senator Gaylord Nelson, known today as the founder of Earth Day. No one in the months and years leading up to Earth Day predicted the extraordinary wave of environmental activism that would follow—especially since environmental demands are largely focused on morally informed, society-wide concerns, unlike those of the labor, civil rights and feminist movements, all of which involve specific gains important to specific people.

In my judgment, new-economy efforts will ultimately pose much more radical systemic challenges than many have contemplated. Nonetheless, new-economy advocates are beginning to tap into sources of moral concern similar to those of the early environmental movement. As the economy continues to falter, the possibility that these advocates—along with many other Americans who share their broader concerns—will help define a viable path toward long-term systemic change is not to be easily dismissed. In fact, it would be in keeping with many earlier chapters of this nation’s history.

President Obama has said recently that the solution to the Israeli-Palestinian conflict is to go back to the 1967 borders with "mutually agreed upon swaps." Really?? Since when have these two parties "mutually agreed upon" anything? The mistake in my opinion is to think that the Palestinians and the Israelis are adult enough to sit down and negotiate and compromise and come up with a solution acceptable to both. It's not going to happen.

They are like two children arguing over a bunch of toys. Each child maintains that all the toys belong to him. Now an adult comes along and says, "Now children you must negotiate a solution in which each of you agrees to give up some of your toys. Go ahead now." What do you think will happen? They will continue to fight and haggle ad infinitum and this is exactly what the Israelis and the Palestinians have done. Left to their own devices they will never come to a solution. The solution to the two children fighting over their toys is not for an adult to encourage them to negotiate; it's for an adult to decide on a rational and fair solution and then say, "Children this is the way it's going to be whether you like it or not." Then both children are going to cry and complain and say the solution is unfair. But after a while they'll get used to it because they have no choice.

Everbody that has looked at the problem has agreed that a two state solution with a Palestinian state living side by side with the Israeli state is the best solution. But each side would rather pursue its own perceived interests than to accept a two state solution if it were to be left up to them. The Israelis say "We're not going to negotiate with the Palestinians unless they say Israel has a right to exist." What difference does it make what the Palestinians "say"? What if they said, "Oh yeah, we recognize the right of Israeli to exist", and then, after the peace treaty was signed, invaded Israel the next day. This is almost precisely what happened in the days leading up to World War II when the British PM Neville Chamberlain agreed to let Hitler annex the Czechoslovakian Sudetenland where many ethnic Germans were living in return for "peace in our time." Hitler promised to go no further in his territorial ambitions, but shortly thereafter invaded Poland which was the start of World War II. The point is that whatever the Palestinians say is not as important as coming up with a solution in which the Palestinians cannot harm Israel regardless of what they say because in the final analysis what they say means nothing just as what Hitler said about "going no further" meant nothing.

What is needed in the Israeli Palestinian situation is a strong adult who will enforce a fair and rational solution on both parties just as what is needed in the case of the two children who can't resolve the "who owns what toys" issue needs a strong adult to resolve it for them. The US is not that adult! The US gives an enormous amount of military aid to Israel. Obama's FY 2011 budget called for a record-breaking $3 billion in military aid to Israel. Netanyahu has said, "Israel has no better friend than America. And America has no better friend than Israel." Well, at least half that statement is true. Here is what activist Roi Maor who lives in Tel Aviv had to say:

The US has many better friends than Israel

Among the many troubling statements in Netanyahu’s speech before the US congress yesterday, it was something that he said at the very outset, which really stood out:

"Israel has no better friend than America. And America has no better friend than Israel."

The first sentence is true. Indeed, it is probably an understatement. The US extends to Israel support and assistance which it provides to no other country in the world (perhaps not even to some parts of the US itself).

The second sentence is false. The US has plenty of better friends than Israel. There are countries in the world that have put their soldiers in harm’s way when the US was attacked on September 11th. Others have changed policies or offered diplomatic support despite the internal and external price they had to pay.

Certainly, they have done so for their own interests, or because the US had done the same for them. But both considerations apply to Israel as well. And yet, this country refuses to show any consideration for US interests, even when the price to pay is tiny.

The settlement freeze debacle and the ugly, and pointless, confrontation between Netanyahu and Obama over 1967 borders are just the most recent examples. Israel has repeatedly embarrassed the US, and undermined its initiatives and policies, for the last few decades, on issues ranging from human rights to nuclear disarmament. It backed down from selling US technologies to China only under monumental pressure, recruited spies in the US to get information the Americans would not share, and many other acts of ingratitude.

It is a well-known psychological phenomenon, that a person is often more bound to another by extending help rather than receiving it. The more you assist someone else, the more you feel committed to her, rather than the other way around. The US-Israel relationship is a perfect example of that.

Israel has no US miltary bases there while we station our troops in Qatar, Bahrain, Kuwait and other less friendly countries. You'd think that for $3 billion a year at least they would let the US have a base there! But the point is that, because of the unique US-Israeli relationship which has historically strongly favored the Israelis over the Palestinians, the US cannot be an honest broker in the denouement of the Israeli-Palestinian situation. The US has been Israel's enabler for far too long. It's as if we expected one of the children's mothers to decide which child got what toys. So who would be an honest, fair and objective broker then? Perhaps the EU which has shown much more equity and balance in its relationship with both parties. Therefore, what I propose is that a commission set up by the EU should decide on what the borders for the two state solution should be and then just say to both the Israelis and the Palestinians, "Hey, these are your borders period." This is similar to the situation in which a fair and relatively objective adult (not one of the kids' mothers) tells them 'this is who gets what' period, end of story. The kids will squawk, cry and scream just as the Israelis and Palestinians will do, but this is really the only way out of this morass.

Then the next component of the solution is to station an international peacekeeping force along the Palestinian/Israeli border tasked with protecting the territorial integrity of both countries. It should have the muscle to go after any offenders just as once the objective adult has decided on which kid gets what, she would have to enforce the solution. Both the Israelis and the Palestinians themselves should be relatively demilitarized so that there is parity between them militarily and they should not enforce the borders. If that international peacekeeping/military force had to be kept in place for 100 years, it would still be cheaper than letting the conflict go on unabated because it would be the cornerstone of peace in the middle east and would do more to curb terrorism than any other action. And it would save the US some $3 billion a year because I would expect other countries to chip in. And while the US was at it, it might as well stop giving Pakistan $2 billion a year. Why does the US think it has to buy the friendship of countries where they're either unwelcome or not appreciated especially at a time in which the US is in a profound debt crisis?

As to the disposition of Jerusalem, it should be made an international city open to all parties and again protected by an international peacekeeping force. The Palestinians and the Israelis will both kick and scream at this solution but they both must - as children must - learn the lesson that it is more important to share than to carry on a raging conflict saying, "Mine. Mine. That toy is mine. God gave it to me." They both must learn that in the final analysis peace and cooperation is more important than ownership.

May 28, 2011

In his latest speeches on the Middle East, President Obama, both at the State Department and at the G8 meeting in France, has pledged billions of dollars in economic aid to Middle Eastern countries, drawing a direct connection between the unrest and demonstrations that brought down the dictators in Tunisia and Egypt, and the joblessness and hopelessness felt by the young people in those two countries.

His adviser on international economics, David Lipton, has been more specific, saying that, “We believe that these two pillars go hand in hand. Without economic modernization, it will be hard for governments trying to democratize to show people that democracy delivers.”

Unemployment in Egypt among young men and women is about 30%. In Tunisia, it is over 40%. The White House claims that with figures like that, the future for democracy in those countries is tenuous.

But wait a minute. What about the US? Unemployment and underemployment here is still up around 20% overall, and it is much higher among young people. Black youth unemployment fell so far in 2011 to an official rate of 44% from 50% last year (because so many young workers just gave up trying to find work)! Among Latino youth, the official unemployment rate is stuck at around 30%. Overall, youth unemployment, according to the official Labor Department figures, is 20%, but remember, the official rate does not count those who are working part time who want full-time work, and does not count those who have given up looking for work. Among young people, it may be that many who work part-time (those who live at home or who are in school or college) actually are not looking for full-time work, so that upward adjustment may not be as great as for older workers, but at the same time, there are certainly more young people who give up looking for jobs than is the case with older workers who have families to support. In any event, it is clear that all these youth unemployment figures are actually too low by a significant amount.

If the official rate of unemployment for all Americans of 9% is actually less than half of the actual rate of 20%, then even if we took a conservative estimate, simply eliminating the adjustment of those working part-time who want full-time work from the youth unemployment figure, and just keeping the adjustment for those who have dropped out of the labor force (stopped looking for work) because it is fruitless, we would still see actual unemployment figures for young people in the US at staggering Egypt-like levels: 30% for all young people, 45% for young Latinos, and as high as 66% for black youth!

So why is the president so concerned about providing economic support to boost jobs in countries like Tunisia and Egypt, in order to “support democracy,” while in here in the US, he has basically thrown in the towel on job creation efforts, and is just talking about cutting the deficit--a Republican theme?

Cutting the deficit, even as economists are increasingly warning that the so-called “recovery” is sputtering, is a recipe for even worse unemployment.

The answer can be found by looking at the way the young have reacted to joblessness in Egypt and Tunisia on the one hand, and in the US on the other.

In Egypt and Tunisia, they took to the streets and stood down police and soldiers, ultimately bringing down their governments.

Here in the US, young people, like their parents, are largely quiescent. Their reaction to the frustrations of joblessness tend to be either self-destructive (drugs and alcohol) or anti-social (gang activity or crime).

If they were to band together and take over city squares to demand action by government to give them jobs, to provide them with access to college funding, etc., they would get the same kind of attention and help from local and state governments and from the White House and Congress that Egyptian and Tunisian youth are getting from the G8 countries.

Sure, they’d have to face down police armed with tear gas and batons, just like their compatriots in Tunisia and Egypt had to do, but once aroused, motivated and organized, young people have the stamina and courage to do that.

What is lacking is any real effort to organize these frustrated and angry young people, and to get them out into the street. The traditional groups that would have done this in the past--the labor movement, civil rights organizations, and political groups on the left--have been somehow neutered. Their focus, such as it is, is on now on elections, on recall campaigns, and on the coming 2012 presidential contest. It is not on organizing unemployed young people.

Expecting the White House to act on this crisis of long-term joblessness and diminished expectations for the future among young workers is foolish. The Obama administration knows what the problem is. It just doesn’t care.

As an “unnamed White House official” put it at a press briefing recently, “I think it’s important to note that the political movements of nonviolent protests that we’ve seen are rooted in part in a lack of opportunity in the region. You have very large populations of young people, many of whom -- too many of whom cannot find a job. You have a history not just of political rights being restricted but of economic corruption that has also frustrated opportunity.

“So we think it’s important to note that some of the protests in the region are deeply rooted in a lack of individual opportunity and economic growth, as well as a suppression of political rights.

“We also know from our study of the past that successful transitions to democracy depend in part on strong foundations for prosperity, and that reinforcing economic growth is an important way of reinforcing a democratic transition.”

That analysis clearly applies equally to the impoverished inner cities of the US, and indeed increasingly to the entire population of young Americans, who are seeing national policies, state policies and corporate lobbying -- all focused on cutting taxes and boosting corporate profits -- rob them of their futures.

Forty Senate Republicans have now joined their colleagues in the House to support Paul Ryan’s plan that would turn Medicare into vouchers that funnel money to private health insurers. They thumbed their nose at the special election in upstate New York earlier this week that delivered a victory to Democrat Kathy Hochul, who made the plan the focus of her upset victory.

So now it’s official. The 2012 campaign will be about the future of Medicare. (Yes, it will also be about jobs, but the Republicans haven’t come up with any credible ideas on that front, and the Democrats seem incapable of doing what needs to be done.)

This spells trouble for the GOP. Polls show an overwhelming majority of Americans — even a majority of Republican voters — want to preserve Medicare. They don’t want to turn it over to private insurers.

It would be one thing if Republicans had consistency on their side. At least then they could take the high road and claim their plan is a principled way to achieve the aims of Medicare through market-based mechanisms. (It isn’t, of course. It would end up squeezing seniors because it takes no account of the rising costs of health care.)

But they can’t even claim consistency. Remember, this was the same GOP that attacked the President’s health-reform plan in 2010 by warning it would lead to Medicare cuts.

Former President Bill Clinton counsels Democrats not to say Medicare is fine the way it is. He’s right. But instead of talking about Medicare as a problem to be fixed, Democrats should start talking about it as a potential solution to the challenge of rising health-care costs — as well as to our long-term budget problem.

Can we be clear about that budget problem? It’s not driven by Medicare. It’s driven by the same relentlessly soaring health-care costs that are pushing premiums through the roof and causing middle-class families to shell out more and more money for deductibles and co-payments.

Some features of Obama’s new healthcare law will slow the rise — insurance exchanges, for example, could give consumers clearer comparative information about what they’re getting for their insurance payments — but the law doesn’t go nearly far enough.

That’s why Democrats should be proposing that anyone be allowed to sign up for Medicare. Medicare is cheaper than private insurance because its administrative costs are so much lower, and it has vast economies of scale.

If Medicare were allowed to use its potential bargaining leverage over America’s hospitals, doctors, drug companies, and medical providers, it could drive down costs even further.

And it could force the nation’s broken health-care system to do something it must do but has resisted with a vengeance: Focus on healthy outcomes rather on costly inputs. If Medicare paid for results — not tests, procedures, drugs, and hospital stays, but results — it could give Americans better health at lower cost.

Let the GOP go after Medicare. That will do more to elect Democrats in 2012 than anything else. But it would be wise and politically astute for Democrats to go beyond just defending Medicare. Strengthen and build upon it. Use it to reform American health care and, not incidentally, rescue the federal budget

In Spain’s capital, Madrid, in the heart of the city, at the Puerta del Sol, from which major roads radiate out toward all corners of the country, thousands of protesters, of all ages and social classes, young and old, have set up camp, literally, in what is now a Europe-wide demand for economic democracy. The protesters and “participantes” include not only young and old, students, post-grads and laborers, but also those who work and those who cannot find work.

Spain, at present, is suffering an astonishing 45% rate of unemployment among young people, principally those between the ages of 18 and 25. Many of them blame the ruling class and the generation that holds power for setting up an economic and political system they say is rigged against their interests. But the movement has spread far beyond the young and the unemployed.

Many of the those who attend the protests, and some who camp in Puerta del Sol, are fully employed, and spend their days working and their evenings and mornings protesting. The movement is best described as a peaceful grassroots uprising, demanding full “economic democracy”, a term that is often heard circulating among those gathered in the square and at the “assemblies” (asambleas) that form around specific issues.

There are meetings, or asambleas, to debate the specifics of a given political or economic issue, and out of those asambleas, a ground-up democratic process forms “commissions” (comisiones), which then help to organize the process of debate and the exchange of ideas, regarding that specific issue. Some of the comisiones in the square have a practical on-the-ground function relating to keeping the encampment functioning.

There are comisiones for food, energy, legal issues, communications and outreach, and there are tables that are set up to take down people’s ideas and suggestions. Donations of food and clothes have been brought in to make it possible for the (mostly young) people who are camping overnight in the square to stay there and keep the footprint of the movement visible.

A public address system announces when one of the asambleas is about to form, in a certain part of the square, so that people can attend or join the debate, and have their say. The movement has spread to villages and cities across Spain, and a coordinated effort to formulate parallel local and “global” strategies and platform positions, is ongoing.

An online campaign, involving multiple different websites, Facebook groups, Twitter accounts, and hashtag discussions, is helping to give material shape to the spontaneously formed, “people power” revolution. Protests are now being staged in Athens, in Paris, in London, and across Europe, with the demand for prosecution of financial felons, and political reforms oriented toward fairness and toward honoring the voice of the people.

In Puerta del Sol, one of the initiatives being considered would require a referendum to approve any new binding economic agreements that would affect people living in Spain, one of its autonomous regions, provinces or cities, to ensure that narrow economic interests don’t impose the structures that benefit them on a populace, to the detriment of democracy. Specifics of the initiative are under consideration, including the frequency and manner in which such referenda would be staged.

The movement in Spain is clearly rooted in the energy, methodology and ideas of similar actions taken in Tunisia, in Cairo, and in Madison, Wisconsin, to protest against misuse of government power, the purchasing of political influence and the suppression of fundamental rights for citizens.

May 26, 2011

In a stunningly heartless move, House Majority Leader Eric Cantor (R-VA) put strings on emergency relief for the victims of the killer Joplin tornado, saying that other government services would have to be cut to offset aid spending. Yesterday afternoon, the House Appropriations Committee passed an amendment by Rep. Robert Aderholt (R-AL) to add $1 billion in funding for the Federal Emergency Management Agency’s (FEMA) disaster relief fund, offset by cutting $1.5 billion from the Advanced Technology Vehicles Manufacturing Loan Program at the Department of Energy. On MSNBC’s Ed Show, Rep. Russ Carnahan (D-MO) called the decision “just plain wrong”:

When you talk about cutting clean energy programs versus cutting subsidies for big oil, let’s have that debate here in Washington. But not on the backs of the people of Joplin.

Scientists have warned for decades that our climate system would grow deadlier as greenhouse pollution from coal and oil increases, with greater floods, heat waves, droughts, wildfires, and storms. Instead of responding to reality by mobilizing our nation to protect people from climate disasters and build a resilient, green economy, Republicans are keeping us tethered to big oil.

“It is staggeringly shortsighted to pay for the economic losses of climate disasters by choking off funding for policies that reduce the threat of future climate disasters,” said Bracken Hendricks, senior fellow at the Center for American Progress. “The Advanced Technology Vehicles Manufacturing Loan Program is helping US companies right now, to remain competitive and protect good manufacturing jobs, by producing highly efficient vehicles that cut dependence on foreign oil. What’s next? Should we cut funding for flood insurance and slash the FEMA budget to pay for flood damage along the Mississippi?”

Update ThinkProgress has acquired the text of the Aderholt amendment. Of the $1.5 billion cut from the clean cars program, only $1 billion is directed to disaster relief, while $500 million is simply rescinded.

Billionaires are different from you and me, for obvious reasons, including the fact that they buy much pricier baubles than we do."The River Styx" by Lotta Tjernström

A sleek car costing $100,000? Why, for them, that's just an easy impulse purchase. A few million bucks for a Matisse original? Go ahead — it'll liven up the hallway. How about throwing a fat wad of cash at a university to get an academic chair named for you? Sure, it's all part of the fun of living in BillionaireLand.

Then there is the top crust of the upper-crust — such megalomaniacal megabillionaires as the Koch brothers. Using money from their industrial conglomerate, their foundation and their personal fortunes, these two far-out, laissez-faire extremists are literally buying public policy. Their purchases of everything from politicians to the tea party help them push the privatization of all things public and the elimination of pesky regulations and taxes that crimp their style.

To advance their plutocratic privatization cause, brother Charles has even gone on a shopping spree for an invaluable bauble that most of us didn't even know was for sale: academic freedom. And it's surprisingly cheap!

For only $1.5 million, Koch bought a big chunk of the economics department of Florida State University a couple of years ago. His donation gives him control of a new "academic" program at this public institution to indoctrinate students in his self-serving political theories.

The billionaire gets to screen all applicants, veto any he deems insufficiently ideological, and sign off on all new hires. Also, the department head must submit yearly reports to Koch about the faculty's speeches, publications and classes, and he evaluates the faculty based on "objectives" that he sets.

Charles has made similar purchases of academic freedom at two other state universities, Clemson and West Virginia. Also, in a May 20 piece at Alternet.org, investigative researcher Lee Fang reveals that Koch has paid $419,000 to buy into Brown University's "political theory project," $3.6 million to establish Troy University's "center for political economy" and $700,000 for a piece of Utah State's Huntsman School of Business, which now has the "Charles G.Koch Professor of Political Economy."

Imagine the screams of outrage we'd hear from the Kochs if a labor union were doing this.

A recent article in The Onion, the satirical newsweekly, printed a downsize-big-government spoof that Charles and David would love to turn into reality. The parody disclosed that President Obama had come up with a surefire plan to balance the federal budget: Rob Fort Knox! "I've got the blueprints," Obama is quoted as saying, "and I think I found a way out through a drainage pipe."

Unfortunately, with today's political climate dominated by howling winds from the far-right fringe, there's no longer any room in American culture for satire. Sure enough, some laissez-faire extremists at such Koch-funded corporate fronts as Cato Institute and Heritage Foundation are presently howling for the government to sell all of America's gold stored in Fort Knox. Noting that we have billions worth of bullion in the vaults, a fellow from Heritage made this keen observation: "It's just sort of sitting there."

Uh, yeah, professor. Like Mount Rushmore, the Grand Canyon, the Lincoln Memorial and other national assets — being there is the point.

Yet these ivory tower ideologues are using the current brouhaha over the budget deficit as an opening to push their loopiest fantasies of selling off all of America's public properties, facilities, systems and treasures to create a no-government, plutocratic paradise. Just spread our public goods out on tables, like a flea market from hell, and invite the global rich to buy it all.

For example, a fellow from another Koch-funded front, the American Enterprise Institute, observes that the government could raise billions of dollars to retire that pesky deficit simply by selling our interstate highway system. Americans would then have to pay tolls forever to the corporate owners, but hey, he exclaims, remember that tolls "work for the River Styx, why not the Beltway?"

What a perfect metaphor for privatization! In ancient mythology, dead souls must pay a toll to be ferried across the River Styx and enter the depths of hell.

National radio commentator, writer, public speaker, and author of the book, Swim Against The Current: Even A Dead Fish Can Go With The Flow, Jim Hightower has spent three decades battling the Powers That Be on behalf of the Powers That Ought To Be - consumers, working families, environmentalists, small businesses, and just-plain-folks.

Hochul had focused like a laser on the Republican plan to turn Medicare into vouchers that would funnel the money to private health insurers. Republicans didn’t exactly take it lying down. The National Republican Congressional Committee poured over $400,000 into the race, and Karl Rove’s American Crossroads provided Corwin an additional $700,000 of support. But the money didn’t work. Even in this traditionally Republican district – represented in the past by such GOP notables as Jack Kemp and William Miller, both of whom would become vice presidential candidates – Hochul’s message hit home.

Ryan calls it “demagoguery,” accusing Hochul and her fellow Democrats of trying to “scare seniors into thinking that their current benefits are being affected.”

Scare tactics? Seniors have every right to be scared. His plan would eviscerate Medicare by privatizing it with vouchers that would fall further and further behind the rising cost of health insurance. And Ryan and the Republicans offer no means of slowing rising health-care costs. To the contrary, they want to repeal every cost-containment measure enacted in last year’s health-reform legislation. The inevitable result: More and more seniors would be priced out of the market for health care.

The Ryan plan has put Republicans in a corner. Some, like Massachusetts Senator Scott Brown and, briefly, presidential hopeful Newt Gingrich, are rejecting the plan altogether. Most, though, are holding on and holding their breath. After all, House Republicans approved it — and voters don’t especially like flip-floppers.

Senate Democrats will bring the Ryan plan for a vote Thursday in order to force Senate Republicans on the record. Watch closely.

Some GOP stalwarts say the Party must clarify its message – a sure sign of panic. Former Republican congressman Rick Lazio says the GOP “must do [a] better job explaining entitlements.”

It’s just possible the public knows exactly what entitlements are – and is getting a clear message about what Republicans are up to.

All this should give the White House and Democratic budget negotiators more confidence – and more bargaining leverage – to put tax cuts on the rich squarely on the table.

And, while they’re at it, turn Medicare into a “Medicare-for-all” system that forces doctors and hospitals to shift from costly tests, drugs, and procedures having little effect, to healthy outcomes.

May 25, 2011

And we wonder why the price of gas is so high and why the Commodity Futures Trading Commission does nothing about it. This is a very revealing article that tells that, even though three out of five commissioners are Democrats, Chairman Gary Gensler, a Democrat, is a long time Goldman Sachs associate. The result is that only one out of the five commisssioners, Bart Chilton, wants to put position limits on oil speculation. The rest want to delay, delay, delay which makes the Dodd-Frank financial regulation bill a joke that will accomplish nothing to rein in the banking industry. Read the article and weep.

Time to Dismiss the CFTC Chairman and His Commissioners

The Dodd-Frank Act gave the Commodity Futures Trading Commission (CFTC) until January 2011 to set mandatory position limits to curb the pervasive and excessive speculation in the energy markets. Well lo and behold, on Dec. 15 the Goldman Sachs alumnus and chairman of the CFTC told congressional lawmakers that the CFTC wouldn't meet the deadline "because it doesn't yet have sufficient data." A few days earlier, Commissioner Jill Sommers, forever happy to lend a good word supporting delay, delay, delay, would instruct us that it was "bad policy to promulgate regulations that are not enforceable." Thus permitting Chairman Gary Gensler, as part of the Sommers/Gensler duo -- the CFTC's own Abbott and Costello act -- to intone, "It's just appropriate to let this one ripen a little more." Just "ripen a little more." Really?

In remarks made on Sept. 19, 2008, before the First Asia Derivatives Conference in Tokyo, Ms. Sommers was quoted as saying:

The U.S. Futures markets have been the focus of intense scrutiny by law makers, the press, and the public over the past year as prices for crude oil and many agricultural products reached record highs. The question on everyone's mind is whether trading is responsible especially with the influx of new traders into the markets... One of the primary tasks of market regulators is to foster high level of market integrity necessary to preserve the important management and price discovery the futures market perform.

Succinct words from a commissioner whose formation included service with the International Swaps and Derivatives Association as head of Government Affairs and Policy, working closely with congressional staff as well as time spent with the Chicago Mercantile Exchange (CME) being responsible for oversight of regulatory and legislative affairs. Talk about putting the lady fox (the reverse would be inappropriate) in the hen house. This past week as the CFTC put forward a proposal to institute a rule to restrict the number of contracts a firm can hold, and called for a 60-day, public-comment period, Ms. Sommers, now some two years since her Tokyo dissertation, let it be known she would vote against the rule, thereby assuming the mantle of the "Queen of Delay and Obfuscation" on issues relevant to reforming our severely tainted commodities trading institutions and procedures.

In the meantime, Chairman Gensler has been busy passing himself off as a reformer. Gensler is an ex-Goldman Sachs partner, having worked at the firm for 18 years, and was brought into the Treasury Department by ex-Goldman Chairman and Treasury Secretary Robert Rubin (Rubin, perhaps now best remembered for his defense of unfettered derivatives trading with minimal government oversight -- the derivatives market now reaching some $300 trillion or 20 times the nation's annual output). Gensler was quoted extensively in a New York Times article, "Goldman Deal-Maker Now Advocates Regulation": "Wall Street's interest is not always the same as the public's interest," and "Wall Street thrives and makes money in inefficient markets, and I am creating efficiencies in the market." This coming from a man who, according to the Times, "in 2000 played a significant role in shepherding through Congress deregulation measures that led to explosive growth of the over-the-counter derivatives."

When Gensler assumed his post in May 2009, the price of oil was $60/barrel at a time when, according to a then-current overview in the Financial Times, "the fundamentals of supply and demand are weak -- much weaker than current prices imply." Today at $90/bbl with fundamentals still glaringly weak, with inventories near all-time highs and refineries working under capacity, his "efficiencies" or lack thereof, are draining $600,000,000 a day from the economy. We consume some 20,000,000 bbls/day X $30/bbl (the difference $90/bbl-$60/bbl) or a staggering tax on the economy of $18 billion a month with gasoline prices again over $3.00 per gallon and heating-oil costs spiraling.

Mr. Gensler, in his remarks this Dec. 15, went on to observe that 148 days had passed since passage of the Dodd-Frank Act was signed into law, calling for trading limits to be in place for oil contracts come January 2011. He assured that his staff had worked assiduously: "They have had more than 475 meetings with the public on rulemaking, had more than 300 meetings with other regulators and organized seven public roundtables."

All of which sounds very impressive. But, then again, not if you turn back the clock. Mr. Gensler has had much more than 145 days to deal with this issue. On July 27, 2009, the Wall Street Journal blazoned a headline that, "Traders Blamed For Oil Spike," advising that the CFTC was to issue a report next month "suggesting speculators played a significant role in driving wild price swings in oil prices." We are still waiting.

Also in July 2009, the CFTC announced it was considering volume limits on energy futures by financial/proprietary traders and tougher information requirements. That wasn't 148 days ago, that was nearly 500 days ago, and now they want even more time. Or to quote Gensler once again, "It's just appropriate to let this one ripen a little more," and all the while "it" is ripening we are paying through the nose.

And who has access to the CFTC while the issue is "ripening a little more"? A plethora of industry lobbyists such as the CME Group Inc., the world's largest futures/derivatives trading platform pushing the CFTC to defer setting limits, and Gensler's professional alma mater, Goldman Sachs. A Forbes article on April 13, 2009, "Did Goldman Goose Oil?" hypothesized that Goldman played a key role in the massive short squeeze on Semgroup Holdings, whose oil positions amounted to 20 percent of the nation's crude oil inventories. The squeeze itself was deemed to have a dramatic impact on the price of oil leading up to the $147/barrel on July 12, 2008. Semgroup Holdings filed for bankruptcy on July 22, 2008. And the likes of the Vitol Group, the oil trading behemoth that in August 2008 held oil contracts equal to 57.7 million barrels, according to the CFTC. At the time, according to the Washington Post ("A Few Speculators Dominate Vast Market For Oil Trading") the CFTC also determined that a massive amount of oil trading activity was concentrated with a handful of speculators, and at that time alone 81 percent of the NYMEX was held by financial firms speculating for their clients or for their own account -- seemingly not enough to light a fire under Mr. Gensler nor the CFTC to do the needful, setting trading limits in place post haste. Clearly letting themselves be stonewalled by industry lobbyists was a greater priority than bringing transparency and constructive limits to what by then had clearly become a trading racket, leaving the nation's consumers to stake the chips of the financial casino high rollers.

Meanwhile the economy staggers under indefensibly high prices while our CFTC Commissioners delays and delays, running out the clock to a gullible Congress and Department of Energy. Two commissioners, Scott O'Malia and Michael Dunn, have already advised that though they are "voting in favor of publishing the rule for public comment that they may not ultimately support imposing position limits." We need more public servants like that?

There seems to be but one forthright voice on the Commission -- Mr. Bart Chilton, who earlier this month, stated that the CFTC is "facing pressure from inside and outside the agency" to find a way around the implementation deadlines. "First we have no legal authority to do so. Second that is exactly the type of dancing on the head of a legal pin Washington-speak that folks in the country are tired of -- and they should be."

Mr. Gensler may be a good man, he may be genuine in his efforts, he may have truly distanced himself from his formative underpinnings of Wall Street and the influence of power. Perhaps, perhaps not. If you permit me a baseball analogy, i's the eighth inning. The CFTC All-Stars are playing the Oil-ogopoly All-Stars. The CFTC All-Stars have their ace pitcher on the mound, Gary Gensler, facing the Oil-ogopoly batters. They have already scored six runs this inning and have the bases loaded. The score is Oil-ogopoly 9, CFTC 6. No matter Gensler's previous record, he now needs be pulled from the game. It's high time for Obama to play Yogi Berra "the manager" and get that guy off the mound and maybe cashier the whole team. He might want to keep Chilton in the dugout at least, so that he could give instruction and guidance to the new players coming on board.

And if something isn't done soon the bleachers may collapse, because that is the only ticket anyone will be able to afford.

Regarding Robert Reich's retort about proposed legislation to put a 3% CAP on Federal Spending, isn't this crazy financial idea, made into law during Reagan's Governorship, exactly what has contributed so disastrously to California's structurally deep budget and deficit red ink over past years?

I would like to draw Reich's and everyone else's attention to the EU Stability and Growth Pact (SGP) which more correctly sets a 3% of GDP CAP on member-country Deficits. This means recommended adjustments by the EU Commission -- to correct a member country's excess deficit breaking the 3% of GDP threshhold -- can take the broader, more sensible form of cuts, higher taxes and/or other constructive actions.

When the EU passed this legislation some time ago, member states realized a rule-based framework was needed in the budgeting process given the harsh reality of people having longer lives and fewer children. Member states saw the urgency of confronting this future cost challenge impact (e.g., health care, social safety-nets, social security) by assuring the long-term sustainability of public finances. Non-compliance with EU's Stability and Growth Pact can trigger others steps, including the possibility of sanctions. Of course, there are provisions for unusual developments like a severe recession crisis.

Noteworthy is that the Stability and Growth Pact has an early-warningpreventive as well as dissuasiveresponse to deficit safeguard measures. The prevention part hasn't worked well for certain grossly mismanaged countries like Greece, Ireland, Portgugal, etc. But, over the years since its implementation, the Pact has ensured structually improved fiscal soundness and awareness by mature EU members. The ongoing EU member states' common goal under the Pact is to consistently correct deficit levels and for doing so within a time-frame that is harmonious with sustainable public finances. Of course, deficits have jumped of late due to the great recession, causing a fall in tax revenues together with a rise in social-spending, e.g., in unemployment benefits. This is the same pernicious problem thst is afflicting the U.S. economy, only we have a relatively far more serious unemployment/underemployment level and 30-year trend of declining rates of job generation.

When can we ever learn something from the best practices of others?

A 3% CAP ON FEDERAL DEFICITS is a far more responsible rule approach than a 3% CAP ON FEDERAL SPENDING. Reich is right. The latter will simply accelerate our Federal Government's Race-To-The Bottom ... a race already carrying down most states and the job-wage-crunched middle-class. Seeing that Senator Lieberman supports this "middle-ages fiscal renaissance" should make everyone nervous! It's utterly irresponsible, stupid, nation-destructive FISCAL AND FINANCIAL MATH THINKING!

The deceivingly named Win America campaign would actually push the nation further into debt.

What if your family's finances were tight, and you had a water bill that you couldn't afford to pay? What if you had a client who owed you enough to cover the water bill? Would you tell your family they would have to go without water, or would you tell your client to pay up?

While President Barack Obama and Congress are allowing spending plans that take $500 million out of the mouths of hungry kids and another $415 million from local cops, they continue to ignore the $100 billion we lose every year, thanks to corporate tax cheats.

Those tax cheats, which include the likes of Apple and Cisco, are buying up Washington's best lobbyists to persuade Congress to let them bring back $1 trillion in profits they've stashed overseas, and pay just a 5 percent tax rate instead of the statutory 35 percent rate. The corporations are calling this scam the "Win America Campaign," although this $350 billion giveaway's only winners are the same corporate tax cheats who continue to bleed our economy dry every year.

Corporate tax holidays may mean higher returns for shareholders, but that certainly doesn't create jobs. A similar 2004 tax holiday brought back $312 billion from 843 corporations at a reduced tax rate, only to see those benefits go to shareholders despite legislation aimed at preventing that from happening. Instead, those companies bumped up shareholder payouts between 60 and 92 cents for every dollar brought home. In fact, the Congressional Research Service has found that the largest beneficiaries of the tax holiday actually cut jobs in 2005-2006.

All a tax holiday would do is prove to these corporations that it's profitable for them to continue stashing profits in tropical tax havens. The Win America campaign would actually push us further into debt if we continued to erode our tax base. It would also mean that smaller U.S. businesses that actually play by the rules would see their taxes raised in order to give big corporations more handouts.

Bringing a trillion dollars back to the United States at just a 5 percent tax rate would cost us billions in lost revenue, which could instead be used for green job training programs for the unemployed, hiring more teachers, rebuilding roads and bridges, or health care. The $350 billion we would lose on a corporate tax holiday could instead reverse any of the numerous drastic budget cuts made to local law enforcement, Medicaid, and the like.

If America's leaders are actually considering giving corporate tax cheats yet another tax holiday while cutting funding needed to keep government working for the rest of us, we need to seriously reconsider our priorities. These corporations owe it to the people who make them prosperous to be accountable and pay their fair share of taxes like the rest of us already do.

This latest lobbying effort by corporate tax cheats would only encourage more offshoring of jobs and income. If Congress really wants America to win, then Congress has the responsibility to stop the Win America Campaign in its tracks and make these corporate tax cheats pay their fair share.

This work is licensed under a Creative Commons License

Carl Gibson is the co-founder of US Uncut, a grassroots movement to stop budget cuts by getting corporations to pay their fair share. He lives in Jackson, Mississippi where, among other things he works as a bouncer at the Club Bottoms Up. www.usuncut.org

Caution: It is vitally important not to make connections. When you see pictures of rubble like this week’s shots from Joplin, Mo., you should not wonder: Is this somehow related to the tornado outbreak three weeks ago in Tuscaloosa, Ala., or the enormous outbreak a couple of weeks before that (which, together, comprised the most active April for tornadoes in U.S. history). No, that doesn’t mean a thing.

It is far better to think of these as isolated, unpredictable, discrete events. It is not advisable to try to connect them in your mind with, say, the fires burning across Texas — fires that have burned more of America at this point this year than any wildfires have in previous years. Texas, and adjoining parts of Oklahoma and New Mexico, are drier than they’ve ever been — the drought is worse than that of the Dust Bowl. But do not wonder if they’re somehow connected.

If you did wonder, you see, you would also have to wonder about whether this year’s record snowfalls and rainfalls across the Midwest — resulting in record flooding along the Mississippi — could somehow be related. And then you might find your thoughts wandering to, oh, global warming, and to the fact that climatologists have been predicting for years that as we flood the atmosphere with carbon we will also start both drying and flooding the planet, since warm air holds more water vapor than cold air.

It’s far smarter to repeat to yourself the comforting mantra that no single weather event can ever be directly tied to climate change. There have been tornadoes before, and floods — that’s the important thing. Just be careful to make sure you don’t let yourself wonder why all these record-breaking events are happening in such proximity — that is, why there have been unprecedented megafloods in Australia, New Zealand and Pakistan in the past year. Why it’s just now that the Arctic has melted for the first time in thousands of years. No, better to focus on the immediate casualties, watch the videotape from the store cameras as the shelves are blown over. Look at the news anchorman standing in his waders in the rising river as the water approaches his chest.

Because if you asked yourself what it meant that the Amazon has just come through its second hundred-year drought in the past five years, or that the pine forests across the western part of this continent have been obliterated by a beetle in the past decade — well, you might have to ask other questions. Such as: Should President Obama really just have opened a huge swath of Wyoming to new coal mining? Should Secretary of State Hillary Clinton sign a permit this summer allowing a huge new pipeline to carry oil from the tar sands of Alberta? You might also have to ask yourself: Do we have a bigger problem than $4-a-gallon gasoline?

Better to join with the U.S. House of Representatives, which voted 240 to 184 this spring to defeat a resolution saying simply that “climate change is occurring, is caused largely by human activities, and poses significant risks for public health and welfare.” Propose your own physics; ignore physics altogether. Just don’t start asking yourself whether there might be some relation among last year’s failed grain harvest from the Russian heat wave, and Queensland’s failed grain harvest from its record flood, and France’s and Germany’s current drought-related crop failures, and the death of the winter wheat crop in Texas, and the inability of Midwestern farmers to get corn planted in their sodden fields. Surely the record food prices are just freak outliers, not signs of anything systemic.

It’s very important to stay calm. If you got upset about any of this, you might forget how important it is not to disrupt the record profits of our fossil fuel companies. If worst ever did come to worst, it’s reassuring to remember what the U.S. Chamber of Commerce told the Environmental Protection Agency in a recent filing: that there’s no need to worry because “populations can acclimatize to warmer climates via a range of behavioral, physiological, and technological adaptations.” I’m pretty sure that’s what residents are telling themselves in Joplin today.

May 22, 2011

Op-Ed Columnist

Some years ago, one of my neighbors, an émigré Russian engineer, offered an observation about his adopted country. “America seems very rich,” he said, “but I never see anyone actually making anything.”

That was a bit unfair, but not completely — and as time went by it became increasingly accurate. By the middle years of the last decade, I used to joke that Americans made a living by selling each other houses, which they paid for with money borrowed from China. Manufacturing, once America’s greatest strength, seemed to be in terminal decline.

But that may be changing. Manufacturing is one of the bright spots of a generally disappointing recovery, and there are signs — preliminary, but hopeful, nonetheless — that a sustained comeback may be under way.

And there’s something else you should know: If right-wing critics of efforts to rescue the economy had gotten their way, this comeback wouldn’t be happening.

The story so far: In the 1990s, U.S. manufacturing employment was more or less steady. After 2000, however, it entered a steep decline. The 2001 recession hit industry hard, while the bubble-fueled expansion of the decade’s middle years — an expansion marked by a huge rise in the trade deficit — left manufacturing behind. By December 2007, there were 3.5 million fewer U.S. manufacturing workers than there had been in 2000; millions more jobs disappeared in the slump that followed.

Only a handful of these lost jobs have come back, so far. But, as I said, there are indications of a turnaround.

Crucially, the manufacturing trade deficit seems to be coming down. At this point, it’s only about half as large as a share of G.D.P. as it was at the peak of the housing bubble, and further improvements are in the pipeline. The Boston Consulting Group, which is now predicting a U.S. “manufacturing renaissance,” points to major U.S. firms like Caterpillar that once shifted production abroad but are now moving it back. At the same time, companies from other countries, especially European firms, are moving production to America.

And one potential disaster has been avoided: the U.S. auto industry, which many people were writing off just two years ago, has weathered the storm. In particular, General Motors has now had five consecutive profitable quarters.

America’s industrial heartland is now leading the economic recovery. In August 2009, Michigan had an unemployment rate of 14.1 percent, the highest in the nation. Today, that rate is down to 10.3 percent, still above the national average, but nonetheless a huge improvement.

I don’t want to suggest that everything is wonderful about U.S. manufacturing. So far, the job gains are modest, and many new manufacturing jobs don’t offer good pay or benefits. The manufacturing revival isn’t going to make health reform unnecessary or obviate the need for a strong social safety net.

Still, better to have those jobs than none at all. Which brings me to those right-wing critics.

First, what’s driving the turnaround in our manufacturing trade? The main answer is that the U.S. dollar has fallen against other currencies, helping give U.S.-based manufacturing a cost advantage. A weaker dollar, it turns out, was just what U.S. industry needed.

Yet the Federal Reserve finds itself under intense pressure from the right to make the dollar stronger, not weaker. A few months ago, Paul Ryan, the chairman of the House Budget Committee, berated Ben Bernanke for failing to tighten monetary policy, declaring: “There is nothing more insidious that a country can do to its citizens than debase its currency.” If Mr. Bernanke had given in to that kind of pressure, manufacturing would have continued its relentless decline.

And then there’s the matter of the auto industry, which probably would have imploded if President Obama hadn’t stepped in to rescue General Motors and Chrysler. For those companies would almost surely have gone into liquidation, closing all their factories. And this liquidation would have undermined the rest of America’s auto industry, as essential suppliers went under, too. Hundreds of thousands of jobs were at stake.

Yet Mr. Obama was fiercely denounced for taking action. One Republican congressman declared the auto rescue part of the administration’s “war on capitalism.” Another insisted that when government gets involved in a company, “the disaster that follows is predictable.” Not so much, it turns out.

So while we still have a deeply troubled economy, one piece of good news is that Americans are, once again, starting to actually make things. And we’re doing that thanks, in large part, to the fact that the Fed and the Obama administration ignored very bad advice from right-wingers — ideologues who still, in the face of all the evidence, claim to know something about creating prosperity.

On Friday morning, I'll be taking part in that annual rite of passage -- the commencement speech. I'll be delivering mine at Sarah Lawrence, one of the great colleges in America.

My speech, of course, will be imbued with all the optimism and hope about the future that the occasion is steeped in. But, after looking at all the data, there is no question that "commencement" has taken on an ironic twist.

For many of the graduates spilling into the job market throughout the nation, there isn't going to be much to commence. Economically at least, this is an especially rough time to be graduating from college.

For starters, just getting to Graduation Day has become historically burdensome. For the first time, total outstanding student loan debt will be higher than total credit card debt -- going over $1 trillion. In 2000, the figure was under $200 billion.

In 2008, two-thirds of those getting their bachelor's degree had to go into debt to do so, compared to only half in 1993. And as of 2011, Mark Kantrowitz, publisher of the websites FinAid.org and Fastweb.com, estimates that the average graduate will enter the job market with a debt load of over $27,000.

This actually isn't all that surprising, given the skyrocketing cost of tuition, which has been going up at an annual rate of 5 percent. According to a briefing paper by the Economic Policy Institute, in 2008-2009, the total cost of attending college on-campus was over $18,000 for those going to a public school, and over $38,000 for those at a private school. When you consider that over the same period the median household income in the U.S. was $49,777, it's not hard to see why even a public college is out of reach for so many American families, at least without going deeply into debt.

And the job market won't be doing the Class of 2011 any favors in helping to repay that debt. According to EPI, the unemployment rate for those aged 16 to 24 in 2010 was 18.4 percent, the highest it's been since the number has been tracked, going back 60 years. From April of last year until March of this year, the unemployment rate for recent college graduates hovered around 9.7 percent. In 2007, it was just over 5 percent. And while the fact that we're still clawing our way out of a recession affects those figures, at roughly the same point in the last two recessions -- 1992 and 2003 -- the unemployment rate for new grads was 6.9 percent and 6.4 percent, respectively.

As is the case with the overall unemployment rate, the jobs crisis isn't affecting all graduates equally. In 2007 the unemployment rate for recent white college grads was just over 5 percent, 6.6 percent for Hispanic grads and around 13 percent for black grads. By last year, those differences had grown alarmingly worse. For white grads, the unemployment rate went up 3.3 percent, for Hispanic grads it was up 7.2 percent, and for black graduates it was up 5.9 percent -- for a total black grad unemployment rate of a devastating 19 percent.

For those graduates who do manage to find jobs, their average salary will be $36,866. In 2009 it was $46,500. And a poll by the consulting firm Twentysomething, Inc. found that 85 percent of new graduates will end up moving back in with mom and dad. Unfortunately, given the obsessive focus on the deficit gripping Washington, an emphasis on job creation is unlikely any time soon.

At some point, we can hope, the recession is going to be over, and then all these recent graduates will get back on track, right? Actually, no. Abigail Wozniak, an economist at Notre Dame, found that the effects of graduating into an economic downturn far outlast the downturn itself -- sometimes as long as a decade. "A bad hand at the beginning of a game where everything is connected has lasting negative effects," says Wozniak.

And according to Carl Van Horn, of the Center for Workforce Development at Rutgers, the effects of graduating into a recession go beyond dollars and cents. "They tend to be less risk-oriented," Van Horn said of recession-era grads. "They're risk-averse. If you can get that job in communications, then you're less likely to look over your shoulder and say maybe there's a better job down the road. You say, well, I better stick with this one."

There is, however, a silver lining to graduating in such tough economic times. Conventional wisdom says that today's graduates are going to be less likely to take chances, less likely to pass up the safe bird in the hand, but, in fact, there is now a higher premium on taking risks and following your dreams, creating your job instead of just looking for one.

The road ahead is definitely rockier than the Class of 2011 imagined it would be. But while this may be the most debt-burdened graduating class in history, it's also the most tech-savvy, the most connected, and the most engaged.

This year's graduates need to embrace this, and build on it, looking for innovative ways to do well for themselves while doing good for others. And, while they're at it, they should use these attributes to help hold our leaders accountable, and keep them from turning away from the mess they've made -- with so many missed opportunities and perverted priorities.

Today, the same politicians in the House of Representatives who claimed that tax cuts for the wealthy would "pay for themselves" are insisting we take them seriously as they try to balance the budget.

Their plan? To end Medicare as we know it, and other gimmicks like cutting basic health care for women.

Montanans and many Americans aren't buying what those politicians are trying to sell. There are better ways to cut government spending and cut the national debt, without stripping seniors and women of their health care.

A good place to start is taking a hard look at the huge amount of money America spends on military operations overseas -- especially on Cold War-era military bases in Europe and Asia.

The U.S. operates more than 1,000 military installations on foreign soil, including 268 in Germany, 124 in Japan and 87 in South Korea. Approximately 370,000 U.S. servicemen and women are currently deployed in more than 150 countries around the world.

Several generations after the defeat of Nazi Germany and Imperial Japan, the world has changed. And so have our armed forces.

The U.S. has the strongest, smartest, most effective military in the world, thanks to our dedicated troops and the cutting edge technology they employ. The days of America needing hundreds of military installations in dozens of countries across the entire world are over.

It's also why I'm backing a plan to require all future wars be paid for. Before I got to Congress, lawmakers charged the wars in Iraq and Afghanistan to future generations. And that's a shame.

As Admiral Mike Mullen, the Chairman of the Joint Chiefs of Staff, recently put it, the biggest threat to American national security is the rising national debt.

But before politicians in Washington try to cut spending by breaking the promises made to our seniors, we ought to be looking at ways to cut the number of unnecessary Cold War-era installations overseas while keeping our armed forces the strongest in the world.

Moving forward, we need a responsible, long-term, bipartisan strategy for cutting debt and cutting spending. That plan should include making Medicare and Social Security stronger for future generations. It should include fair tax reform. And it should include spending cuts -- including cuts to defense spending where we can afford them.

Montanans and all Americans -- and future generations -- deserve no less.

Medicare is arguably one of the nation’s most successful and cherished public insurance programs. The program covers approximately 47 million elderly and disabled Americans, and helps pay for hospital, physician visits, and prescription drugs. It is truly hard to argue with success.

The traditional Medicare program, coupled with a supplemental private insurance policy, covers most of our seniors’ medical bills, with far less co-pays and out-of- pocket costs than private insurance.

Therefore, proposals to privatize Medicare — like Rep. Paul Ryan’s — have been met with such fierce opposition, because it was revealed in the national media that privatization meant much higher out-of-pocket costs for seniors. National polls have shown strong general support for maintaining Medicare or even increasing funding for it.

However, Medicare costs are projected to increase from $519 billion per year in 2010 to $929 billion in 2020.

The simplistic argument we often hear from conservatives is that Medicare is a costly federal government program because all federal government programs are inefficient and therefore costly. According to their line of reasoning, privatization is the only way to save money.

The truth is that there are several other ways to strengthen Medicare, but there has been a false debate in the nation regarding the rising costs of Medicare.

This may be partly due to not understanding a fundamentally key concept regarding current healthcare policy — there are no effective cost-containment mechanisms in place to control the private market costs of prescription drug costs, corporate hospitals and medical technology which are the main drivers of Medicare costs.

Research by respected nationally renowned economist Dean Baker shows that the federal government and Medicare beneficiaries would save $600 billion dollars between 2006 and 2013 if Medicare were allowed to directly negotiate prices with pharmaceutical manufacturers.

One study by Families USA found that the Veterans Administration was able to negotiate substantially lower prices for the top 20 drugs used by seniors, compared to private Medicare part D plans.

It would only make sense for there to be bipartisan support for Medicare to be able to use the full faith and credit of the federal government and be able to negotiate down the rising costs of prescription drugs.

According to Forbes magazine, hospital charges represent about one third of total healthcare spending — $718 billion altogether. Twenty four hospitals in this country with over 200 beds make an operating margin of 25 percent or more — a profit margin that compares favorably to drug giants like Pfizer, and easily beats the operating profit margin that General Electric reported in 2009.

We can no longer continue to have America’s hospitals make these kinds of large profit margins, when the health of our senior citizens and the fiscal health of our nation are at stake. It will take much needed political courage to address the root causes of rising Medicare costs — a Wall Street-dominated healthcare system.

America must transition to a non-profit improved Medicare-For-All program, if we are to have any chance of realistically containing over-all healthcare costs. That’ s why I have reintroduced H.R. 676, the Expanded and Improved Medicare For All Act, that would provide for a single-payer healthcare system, providing all Americans with healthcare coverage.

Countries in Europe, Japan, and Taiwan have been able to effectively contain their healthcare costs for decades through their very successful universal healthcare systems — without waiting lines, rationed care, and out of control taxes.

America can learn invaluable lessons from other nations on how to control healthcare costs, and the time has come to be open minded about their success and honest about our need to change course from our corporate-dominated and inefficient healthcare system.

Rep. John Conyers, Jr. (D-MI) is the ranking member of the House Judiciary Committee and in his 24th-term representing the west side of Detroit, its enclave cities of Hamtramck and Highland Park, and the suburbs of Dearborn, Allen Park, Southgate and Trenton. Readers may write him at 2426 Rayburn House Office Building, Washington, DC 20515

For months, Texas Gov. Rick Perry (R) has berated President Obama and the Federal Emergency Management Agency (FEMA) for not giving the state more federal money to combat historic wildfires that have so far burned 2.5 million acres. Despite the fact that the administration has offered 26 different kinds of federal assistance to combat the fires, Rep. Ted Poe (R-TX) claimed that Obama is waging “a war on Texas.” After months of blaming the President for not doing enough, Reuters reported yesterday that Perry is poised to sign a budget that slashes funding for the state agency that is battling the wildfires.

Republicans control all three branches of government in Texas and are close to an agreement on a budget that makes deep cuts to the Texas Forest Service during an unprecedented and destructive wildfire season:

The Texas Forest Service faces almost $34 million in budget cuts over the next two years, roughly a third of the agency’s total budget. The cuts are in both the House and Senate versions of the proposed state budget. [...]

Assistance grants [for volunteer fire departments] are likely to take the biggest hit. Volunteers — two of whom were killed in fighting this year’s fires — make up nearly 80 percent of the state’s fire-fighting force and are first responders to roughly 90 percent of wildfires in Texas.

Chris Barron, executive director of the State Firemen’s and Fire Marshals’ Association, says the funding on the chopping block is indispensable. Many volunteer fire departments already have worn-down equipment, and without funding for new equipment, “response times will almost certainly increase.”

Perry’s recent boast that Texas is “a model for the nation in disaster preparedness and response” is especially ironic in light of his approval of cutting Forest Service funds when the agency most needs them. Meanwhile, the governor, who one Texas political columnist notes “has made almost a religion of blasting everything Obama does and doesn’t do,” has accused the president of pursuing a political vendetta against Texas.

“Why are you taking care of Alabama, why are you taking care of other states,” Perry said at a press conference this month, adding, “The letter [requesting federal aid] didn’t get lost in the mail.” Perry carried his public blame game so far that he even refused to meet with the president when he visited Texas last week to deliver an immigration address.

One recent Fort Worth Star Telegram editorial called out Perry for his posturing:

Their feigned outrage and indignant messages to the White House about recent Texas wildfires and the administration’s refusal to declare practically the entire state a disaster area are acts of political grandstanding rather than true concern for the safety and welfare of fellow Texans. [...]

[Perry] knows full well that his request for a disaster declaration was overstated and that his insistence that FEMA is denying help is a gross exaggeration. [...]

Even if we assume, or desperately want to believe, that the federal government has not done enough to help Texas in this crisis, does anyone believe that all but two of Texas’ 254 counties should be declared a disaster area because of wildfires? That’s preposterous.

Despite the fact that FEMA’s manpower and money have been stretched thin by a series of disasters, they’ve been deeply involved in the effort to fight the Texas fires and have given the state aid that “covers 75 percent of Texas’s costs for emergency response work, such as evacuations, equipment, field camps and meals for firefighters.”

President Obama is mulling an executive order to force big government contractors to disclose details of their political spending. Big businesses are already telling their political patrons in Congress to oppose it – and the pressure is building.

The President should issue the executive order immediately. And he should go even further – banning all political activity by companies receiving more than half their revenues from the U.S. government.

Lockheed Martin, the nation’s largest contractor, has already got more than $19 billion in federal contracts so far this year. But we know very little about Lockheed Martin’s political spending other than its Political Action Committee contributions. We don’t know how much money it gives to the Aerospace Industries Association to lobby for a bigger defense budget.

We don’t even know how much Lockheed is giving the U.S. Chamber of Commerce to lobby against Obama’s proposed executive order requiring disclosure of its political activities.

Don’t we have a right to know? After all, you and I and other taxpayers are Lockheed’s biggest customer. As such, we’re financing some of its lobbying and political activities.

Lockheed’s lobbying and political activities are built into its cost structure. So when Lockheed contracts with the federal government for a piece of military equipment, you and I end up paying for a portion of its political costs.

It’s one of the most insidious conflicts of interest in American politics.

Now, in the wake of the grotesque Supreme Court decision, Citizens United vs. the Federal Election Commission, there’s no limit on what Lockheed can spend on politics.

That’s why the President should go the next step and ban Lockheed and all other government contractors that get more than half their revenues from government from engaging in any political activities at all.

Otherwise, you and I and other taxpayers indirectly pay for Lockheed and Northrop Grumman to lobby for a larger military budget and support politicians who will vote for it.

We indirectly pay for Blackwater to lobby for – and support politicians who will demand – more use of contract workers in Iraq and Afghanistan.

We indirectly pay for Raytheon and General Dynamics to lobby for, and support politicians who will push for, more high-tech weapons systems.

And so on.

Disclosure is a start. But in this post-Citizens United world, it’s only a beginning of what’s needed.

May 21, 2011

We hear all this blather about how the US is such a wealthy nation. Not true. Before Ronald Reagan became President, the US was the world's largest creditor nation. People and countries owed us more money than we owed them. Now some 30 years later the US is the world's largest debtor nation. This is the definition of a poor - not a rich - nation. China on the other hand holds $3 trillion in international reserves including $1 trillion of US debt. Other nations have sovereign wealth funds which contain vast amounts of money. The US has only a huge pile of debt - some $14 trillion worth. The US used to be the world's largest importer of raw materials and exporter of manufactured goods. Now we're the world's largest exporter of raw materials and importer of manufactured goods with a trade deficit of some $600 billion a year. At the present time the US has a deficit of some $2 trillion in needed infrastructure repairs while China is building high speed rail track at such a rate that it will soon have more miles than the rest of the world combined. Meanwhile, the US spends more on its military establishment than the rest of the world combined while cutting safety nets and education for its own citizens.

Americans have pulled the wool over their own eyes. Despite having a national debt of $14 trillion, despite having gone from a net creditor nation to a net debtor nation in little over 30 years, despite having enormous trade deficits month after month, year after year, despite having an infrastructure in need of $2 trillion worth of repairs, Americans think they live in a wealthy nation. The truth of the matter is that the US is a poor nation within which live a lot of wealthy individuals. China on the other hand holds a little over $1 trillion of US debt making it a fairly wealthy nation albeit with a large but diminishing number of poor people. China is building new infrastructure at an astonishing rate. It's a fallacy to think a wealthy nation is a nation comprised of a large number of wealthy individuals. In fact many Banana Republics are comprised of a small class of wealthy individuals surrounded by a sea of poverty. The US is on track to becoming one of those. A recent survey showed that there is a higher level of inequality in the US than exists in Pakistan, Ethiopia and Ivory Coast.

It is not hard to diagnose why the US is a poor nation which thinks itself rich while China is a rich nation which passes itself off as being poor. All the free trade agreements like NAFTA and CAFTA have resulted in the decimation of the US manufacturing base. US factories are closing in droves:

2010 comes in the midst of a stunning wave of U.S. factory closings that stretches from coast to coast. Once upon a time America was the greatest manufacturing machine that the world has ever seen, but now it seems as though the only jobs available for working class Americans involve phrases such as “Welcome to Wal-Mart” and “Would you like fries with that?” Even though the population of the United States has exploded over the last several decades, the number of Americans employed in the manufacturing sector today is smaller than it was in 1950. America has become a voracious economic black hole that ”consumes” as much as possible and yet actually produces very little. The United States is becoming deindustrialized at a blinding pace, and it is becoming increasingly difficult for blue collar American workers to find jobs that will actually enable them to support their families. The sad truth is that American workers don’t have a whole lot to actually celebrate this Labor Day. 14 million U.S. workers are “officially unemployed” and tens of millions of others have been forced to take part-time or temporary jobs that they are overqualified for just so they can survive. Unfortunately, this is not just a temporary situation for American workers. As millions of good jobs continue to get outsourced and offshored, Labor Day celebrations in coming years will be even more depressing.

Since 2001, The U.S. Has Lost 42,400 factories. The "giant sucking sound" that Ross Perot predicted has become a point of actual fact. But this doesn't seem to bother America's leaders. They are dedicated to the policy that US consumption drives US GDP and as long as US GDP is the largest in the world, who cares? Sales are up! However China, as the world's second largest economy as measured by GDP, is on track to overtake the US in the near future. American politicians only care about transnational corporations, nominally American, and how they can maintain the US consumer appetite (and their profit margins) for buying their goods even though most of those goods are produced overseas. They coddle these corporations by lowering their taxes, having their lobbyists drill loophioles in the tax code and giving them a "tax holiday" during which they can "repatriate" their overseas capital and bring it "home" without any tax consequences.

The model of trickle down economics, long since discredited, is still being championed by right wing politicians with the result that the fig leaf of prosperity is being shredded to reveal a naked transfer of wealth from the middle class to the upper one per cent. Naked power grabs are becoming the order of the day as the recent vote to extend taxpayer subsidies to the five Big OIl companies, despite their being the most profitable corporations in human history, reveals. At the same time those same right wing policticians are demanding that the budget be balanced on the backs of the poor and middle class. While countries such as Norway fund their safety net with royalties from oil drilling, the US gives away its natural resources to oil corporations including BP which is not even headquartered in the US. The neocon model of privatization and eliminating safety nets, although unsuccessful in Argentina and Brazil, is achieving considerably more success when practiced here at home. Trade unions are being decimated. States are being turned into fiefdoms and dictatorships. Public education is being defunded. There is an all out assault on teachers, police and other public workers. The notion that government doesn't work and can't be trusted is being fostered.

The US is becoming the very definition of a Banana Republic. It is becoming a nation largely bereft of a middle class, a nation in which there exists a small class of extremely wealthy individuals surrounded by a sea of impoverishment, a nation of antiquated infrastructure, a nation in which there is no there there. All that exists is a diminshing probablity of getting rich or even making it into the middle class. Students are being saddled with immense and obscene amounts of student loan debt. Middle classers are losing their homes to foreclosure. Poor people are being shunted aside as food stamp programs are being shut down and home heating oil allowances are drying up. The war on the poor is raging. And the American people continue to vote the guys that are screwing them into office because they pander to them with promises of unlimited rights of gun ownership and promises that they won't allow gays to marry

The US in point of fact is not a wealthy nation despite attempts to brainwash us that it is, and it's becoming poorer by the hour. But instead of implementing a rational health care system, we continue to give away billions to the pharmaceutical companies that we wouldn't have to if the government weren't prevented by law from negotiating with them. We continue to give away billions in subsidies to Big Oil and Big Agriculture. We continue to give away billions in tax breaks to the rich. We continue to pour billions down ratholes in Afghanistan, Pakistan, Iraq, Israel and many other places. .

These countries are taking us for a ride, and the Israeli President Netanyahu lectures our President on why he won't cooperate to bring about mideast peace. They are manipulating us out of our money while actually working and fighting against us as revealed by Pakistan's harboring of bin Laden. If Obama had tried to coordinate bin Laden's capture with Pakistan instead of going it alone, bin Laden would probably have been tipped off with the result that the Seals, to Obama's embarassment, would not have found bin Laden at home. What, no bin Laden? Just innocent women and children.

As China eats the US' lunch and the rest of the world rips off Uncle Sucker for billions of US taxpayer dollars, the American people should get used to the fact that we're not number 1 any more. Far from being the world's richest nation we're fast becoming one of the world's poorest nations where some of the world's richest people happen to reside. But don't worry about them. They also own villas in France, Italy and Spain. They only continue to hold US citizenship as a convenience. They could live anywhere. They could headquarter their corporations anywhere. It's still convenient for them to headquarter here so they can use their lobbyists to rip off American taxpayers and sell into the American consumer market. But as time goes on most of their sales will be to emerging consumer markets in China and elsewhere.

The IMF can do far more damage trashing global economic well-being than the man behind the sex abuse scandal.

The sex scandal surrounding the head of the International Monetary Fund has thrust the organization into the media's glare. Yet, the man behind the scandal is far less relevant to trashing global economic well-being than is the institution itself.

Regardless of who takes over for the IMF's disgraced leader, Dominique Strauss-Kahn (DSK), it’s unlikely he or she will bring about a philosophical shift in the IMF’s MO. For the IMF doesn’t care what caused devastating financial hardship to its current "focus" countries like Ireland, Greece and Portugal, nor what deal is struck in return for its aid. Saving the superpower notion of Europe and the euro as a pan-European currency by bailing out (read: lending money in return for "austerity measures" and holding fire sales of national companies) is a goal bigger than DSK.

This ideal is more important to the IMF than the financial security of ordinary citizens. Thus, the IMF will remain the validating and financing arm of the European Union (EU) and maintain the euro’s cohesiveness, no matter the cost to ordinary people. By doing so, it will continue to create debt to pay for bank screw-ups and extract repayment from innocent local populations.

Indeed, any concerns about the IMF altering its method of swapping loans for austerity measures just because its chief is facing felony charges, were alleviated the day he was denied bail. On Monday, Portugal, the third European country in the past year to get a bailout, was approved for a 78-billion-euro rescue package. The price? Public spending cuts. The benefactors? The private Portuguese banks that turned around to raise cash backed by bailout-guarantees a moment later.

In Ireland, where a swish of hot money entered the country during the years leading up to the 2008 crisis, the $113 billion IMF/EU bailout did nothing to bring down the 14.7 percent unemployment rate, even as $23 billion of pension money was requested as a condition of the loan.

It’s the same story in Greece. There, the IMF has backed the EU in exacting austerity measures running the gamut from pension and wage cuts to privatization demands. To comply with its bailout agreement, Greece must continue to sell off its functioning and solvent national companies, such as its electric companies, to the highest international bidder. You know, the bidder that will care about what happens to the local cost of power. (Think Enron and California power plants a decade ago.)

But that’s what the IMF has always done. It provides loans at cheaper rates than countries would receive any other way during times of economic distress, in return for forcing them to open their economies to hot money looking for a good deal. This is based on the premise that public infrastructure and social safety nets are the cause of financial woes, and not the over-leveraged banks that funneled in the hot money to begin with.

As Andy Robinson, a journalist stationed in Athens, who writes for the Spanish paper, La Vanguardia, put it, “The IMF wants the country to sell off its grandmother’s silver to make room for more luxury beachfront hotels.”

Unfortunately for Greece, what the IMF wants more of, is exactly what caused its debt crisis -- hot money that turned cold. External investment banks and funds extracted profits from the country and then headed for the hills.

Three years ago, in May 2008, Bear Stearns was handed to JPM Chase on a Fed-backed platter in Phase I of the great US bank bailout and subsidization strategy. Meanwhile, the Greek finance ministry proudly proclaimed US investment interest (i.e. hot money from banks, hedge funds or private equity funds) was strengthening.

At the time, Greek Economic and Finance minister, George Alogoskoufis further noted, “international financial organizations, such as the International Monetary Fund, also acknowledged the significant progress made by the Greek economy.” At the time, he said “an international credit crisis has not affected the Greek banking system” and “that economic conditions would return to normality in 2009.”

It didn’t work out that way. Five months later, in October, 2008, the global banking crisis arrived in Greece. The Bank of Greece had to pony up 28 billion Euros to bail out its banks (for starters). Blindly optimistic, a month later, the Greek embassy promised that the country's economic growth would exceed the EU average for 2009-2010.

Then, things collapsed. By May, 2010, the EU and IMF pushed a $141 billion euro rescue package on Greece, with strings attached, but on the people of Greece, not the banks whose behavior trashed its economy. The result was widespread street protests.

Now, a year later, with the looming possibility of a default on it debt, and talk of more bailouts in the works, the Greek people are again taking to the streets.

The fact that public austerity measures don’t secure an economy remains lost on the IMF and EU. Instead, they want countries to sell whatever they can at rock bottom "crisis" prices, and extract the rest of the money to repay loans from citizens. The IMF and EU have just asked Italy and Spain to do more of this antiquated policy.

In retaliation, Spain’s population took to the streets in 50 cities last Sunday, protesting national austerity measures. Their chants made it clear they knew that the banks and enabling politicians caused their pain. Spanish banks are sitting on 113 billion euros of bad loans, an overhang from an international housing speculation boom gone wrong. The population faces a 21.3 percent unemployment rate, 40 percent among its youth. Austerity measures don’t create jobs.

This IMF notion of opening a countries’ doors to hot money to demonstrate economic worthiness is completely misguided. The flow of fast money does not, by any measure, help the well-being of a country's population at large. The recent uprising in Egypt, a country given gold stars by the IMF for opening its boundaries to unrestricted, irresponsible hot money to erect luxury condos and beachfront homes, is another obvious sign of this tactic’s failure.

And, yet, again and again, the IMF instills surefire economic destabilization through unaltered money-interested policies, sucking the financial life out of unarmed citizens. The IMF will soon choose a new leader to take the reigns from acting head and former JPM Chase chief economist, John Lipsky. There is talk that for the first time since its inception, this leader may come from outside the core European fold. Chances of that are remote. But, unfortunately, no matter who leads the IMF next, its legacy will continue to impart pain on the people of the countries it vows to assist. And that means more uprisings to come.

Legislative Democrats back Republicans into a corner in the fight to extend temporary tax increases and resolve the state’s budget morass.

Well it’s about time. Democrats have traditionally been accused of being soft and easy to push around, particularly by partisan Republicans who have mastered the art of bullying and misleading their way to getting what they want, whether that be on tax policy or social issues. But California Democrats—with a 52-28 majority over Republicans in the legislature, and a 25-15 advantage in the State Senate—are finally flexing their muscle and getting aggressive in a manner that has typically been reserved for Republican lawmakers. It’s almost like it’s becoming a fair fight.

With the State of California still bogged down in a budgetary quagmire, Governor Jerry Brown has made it one of his top priorities to extend the temporary tax hikes instituted in 2009 and due to expire on July 1st. Brown has insisted on putting forth a ballot measure to allow the voters of California to decide whether or not to extend the taxes for five years, or to let them expire as scheduled (a bad idea, letting the voters have direct say, but that’s another issue for another column).

Republicans in the state legislature—not surprisingly—have refused to even consider the prospect of extending the taxes. Because, well, you know, they’re working—slowly but surely.

Democrats in Sacramento have proposed a balanced approach to filling the now $15.4 billion projected budget gap, down from the over $25 billion deficit originally projected for 2011-2012. Massive cuts along with tax increases have helped to close the gulf, but more has to be done. Dems are calling for more cuts along with some tax increases, including the extension of the 2009 temporary hikes.

Republicans in the legislature, of course, are having none of it. Their solution is an all cuts budget proposal that won’t raise taxes, and eliminates programs that help the most vulnerable Californians. Under the Republican plan released last week, early child development programs and funding for mental health services would be nearly eliminated. Former Governor Schwarzenegger tried to divert those same funds back in 2009 with a ballot measure, but he was soundly defeated as California voters rejected the idea of taking away programs for at-risk kids and of putting more people with serious mental illnesses back on the street without any treatment, potentially putting the public at risk and shutting out those who cannot help themselves.

Republicans also say they would eliminate over $1 billion in state employment costs, but never specify just how they’d go about it—most likely by eliminating 10% of the state workforce.

Democratic efforts, meanwhile, were a bit hamstrung this week despite the delivery of some good news on the budget front: The state saw an unexpected $6.6 billion increase in revenues from the increased taxes on the wealthy among other things. It’s good news in the sense that it’s an additional $6 billion that the state wasn’t otherwise counting on, $3 billion of which Governor Brown intends to put back into California schools—a welcome reprieve for school districts across the state.

It’s bad news because it has given Republicans reason to squawk about it being unnecessary to extend any tax increases; they argue that the surprise revenues prove California is on fine financial footing, and there’s no reason to raise any more revenues. Never mind that this recent windfall only partially closes the remaining budget gap. And never mind that the state is still facing years more of deficits if something isn’t done. Because for some reason it doesn’t make sense to Republicans to continue on the course we’re on, eliminate the deficit, balance the budget, and maybe even <GASP!!!> run a budget surplus and then consider lowering taxes, giving their rich benefactors a break. That would make too much sense. Let’s just ignore the fact that there’s no guarantee that the state will see that same $6.6 billion next year or the year after, which would put us even deeper into a hole.

But the Dems are fighting back for a change. Even before the discovery of the additional revenue, Democrats pushed back hard against the idea of an all-cuts budget. First came the seed of an idea pushed by State Treasurer Bill Lockyer and picked up by State Senate leader Darrell Steinberg. They’ve proposed hanging Republican districts out to dry. If Republicans want cuts to services, then they’ll cut funding in those districts and redirect it to districts that will put the money to better use (i.e. Democratic districts). It’s cruel, but it makes the Republicans and their constituents put their money where their mouths are. They want less government; they want fewer government services and less government expenditure; what better way to show them how their plan works than to hit them at the local level?

But it’s really not all that cruel if you think about it. After all, Republican districts in California are typically the more rural and sparsely populated areas, with a few exceptions. It’s the more densely populated Democratic districts that pay the lion’s share of taxes in the state, and much of that money gets funneled to the Republican districts that apparently don’t want it (or at least their elected representatives say they don’t).

In a way, it’s giving the Republicans exactly what they want, if not in a way that they want. If they refuse to raise taxes to help fix the budget mess, then make them feel the most pain.

Another plan being floated by Steinberg and the Democratic legislature—kind of an offshoot that serves roughly the same purpose–is to cut state funding for services such as schools, police, fire, health care, and other social services and allow local governments and school districts the freedom to raise taxes on their own to pay for it—including implementing for the first time a local income tax. Locales that place a higher value on certain services would be able to raise the taxes to pay for them. Those locales that don’t value such services won’t.

The problem with that idea, and what scares Republicans and business interests so much is that it would create this mish-mosh hodgepodge of taxation across the state. You’d never know from street to street, city to city, how your taxation system would work. There would be no consistency statewide, which would hurt business interests and their ability to plan their own budgets from one year to the next, creating a lot of uncertainty and hampering business investment (at least theoretically).

The thing that really scares Republicans and entities like the California Chamber of Commerce is that the Democrats have the votes to pass such a measure without any Republican support.

Brown and the legislative Democrats need a mere two Republican votes to pass their proposed budget. But Republicans, true to form, have marched lock step in opposition, instead proposing their own budget that paints a pretty grim picture of California. They need two reasonable Republicans to step forward and accept the fact that revenue increases in addition to spending cuts must be a part of any realistic budget solution. So far there are no takers.

Democrats have decided that enough is enough. If Republican lawmakers want to put people at risk; if they want to eliminate essential services and leave the least among us out in the cold, then the effects of those cuts should be shouldered largely by Republican districts. They elected those lawmakers, and those lawmakers allegedly represent their interests, their desires. It is their voice in state government. So why not give them exactly what they want?

It’s high time that Republicans put their money where their mouths are.

May 19, 2011

Budget protests continued in California this week as hundreds of San Jose city workers gathered at City Hall plaza Tuesday night to dispute the city budget that aims to cut staff, salaries, and benefits.

Waving signs and chanting, "They say cut back, we say fight back!" the protesters rallied, then marched from the plaza to the council chamber, where Mayor Chuck Reed and the council had scheduled an evening meeting to discuss the 2011-12 budget.

The 300 or so protesters -- mostly city employees and union members, some faith leaders and community members -- are fighting proposed budget cuts that will slash neighborhood services, reduce library and community center hours, cut funding for youth programs including gang prevention, and lay off police and firefighters.

The city faces a general fund shortfall of $115 million in the fiscal year that begins July 1. When that gap is closed, the general fund budget will total $819 million.

Under the proposed cuts, nearly 200 police and 64 firefighter positions would be eliminated, library services and hours would be reduced to three days per week, ten hub community centers would have their hours reduced, and park ranger jobs would be slashed by more than half.

"San Jose will not become the Wisconsin of the West -- we will not let that happen," Lee Saunders, [secretary-treasurer of the American Federation of State, County and Municipal Employees, AFL-CIO], told the crowd gathered outside City Hall early Tuesday evening.

Pensions have long been a loathed target of austerity hawks who view the system as wasteful even though a conducted city audit indicates that 40 percent of city retirees, as well as survivors and other beneficiaries, have annual pensions earnings of less than $24,000 a year.

In Sacramento, hundreds of police officers and staff members also protested Tuesday night before a city council budget hearing to oppose $12 million in cuts. On the chopping block are 167 police department positions, including 80 police officers.

Those opposing the police cuts pleaded for observers to consider the consequences of firing law enforcement employees. For example, longer waits when you call 911.

"Every second counts, especially when you have a loved one who's suffering a heart attack, a mother finding her child floating in a pool. Minutes count," supervisory dispatcher with Sacramento Police Department Paul Troxel said.

Troxel said his job is on the line. "With the budget cuts, my rank (as) supervising dispatcher would be eliminated," Troxel said.

Here in New York City, we saw the consequences of these kinds of budget cuts during a particularly bad blizzard in early January. Mayor Bloomberg’s decision to fire 400 sanitation workers meant that there were less workers to clear the streets, which resulted in Emergency Medical Service workers having a hard time reaching distressed citizens.

The city had a backlog of around 1,300 critical calls – not calls for minor occurrences, but critical, life and death stuff. Over a thousand of those went unanswered.

With resources in short supply, the EMS was forced to limit CPR time to 20 minutes. Desperate and unable to wait for the limited EMS response team to come and save them, residents of Forest Hills dragged people from a fiery building and transported them to a nearby hospital on sleds.

That’s the reality of a world quick to cut services at the bottom instead of moderately raise taxes at the top, which is why California residents are trying to stop that dystopian vision before officials unleash it.

Allison Kilkenny is the co-host of the progressive political podcast Citizen Radio (wearecitizenradio.com) and independent journalist who blogs at allisonkilkenny.com. Her work has appeared in The American Prospect, the L.A. Times, In These Times, Common Dreams, Truthout and the award-winning grassroots NYC newspaper The Indypendent.

Gas prices are hovering around $4, and are well above that in some areas. However, there are some other, much bigger numbers that also merit attention:

$10.7 billion. $7.2 billion. $6.3 billion. $6.2 billion. $3 billion.

Those massive numbers are the profits -- from just the first quarter of 2011 -- of the five biggest oil companies: ExxonMobil, BP, Shell, Chevron, and ConocoPhillips. All told, the big five oil companies reported $36 billion in profits for the first quarter of 2011, more than $200,000 every minute, and oil profits have soared in recent years as gas prices have skyrocketed.

Several factors make those record profits possible. Crude oil prices have jumped to around $100 per barrel. The industry is more concerned with cost than safety when building wells, often cutting corners to save money. And each year, the federal government gives about $4 billion to the oil industry to encourage it to do what it would normally do anyway.

Some of these lavish tax loopholes that give the oil industry this money began nearly a century ago, when Congress decided that it would be beneficial for the American economy to encourage the production of a new source of energy. As the industry -- and its lobbying operation -- expanded, so did the handouts. Today, the sector is so rife with giveaways that some companies earn a higher return on investments after taxes than before. What's more, most of the profits oil companies make, and therefore most of the money they receive in tax breaks, doesn't even go to exploration or drilling -- companies spend most of their profits buying their own stock to increase its value.

During the congressional debate about the Energy Policy Act of 2005, a barrel of crude oil sold for about $55. In April of that year, oil-friendly President Bush stated, "We don't need incentives to oil and gas companies to explore. There are plenty of incentives," and in a Senate hearing that November, Senator Ron Wyden (D-Ore.) asked the CEOs of the five largest oil companies whether they agreed with the president. Although all five said that incentives were unnecessary, the Republican-controlled Congress extended the subsidies in the final bill.

Six years later, with oil selling for nearly twice its 2005 price (and six times the $18 per barrel it cost in 1995, when Congress expanded subsidies to encourage offshore drilling), the handouts continue. But now, these same oil companies claim they wouldn't be able to do business without them. A ConocoPhillips press release last week called proposals to end the giveaways "un-American," and CEO James Mulva -- the same CEO who told the Senate that his company did not need incentives six years ago -- stood by the statement at a Senate hearing the next day. The oil industry also says that repealing these subsidies would raise prices at the pump, but oil prices are set by global supply and demand -- direct subsidies just pad companies' profits.

The whole debate boils down to a series of simple questions: what is the government's role? Who should the government support, people or polluters? Does the government exist to provide a safety net for the disadvantaged or to pad corporate profits?

It is indefensible for our federal government to demolish the social safety net that has made this country the economic and social wonder it has been for the last fifty years, while continuing to hand out more than $200 billion in subsidies to environmentally destructive industries. As income inequality widens and the country struggles with nine percent unemployment, it is no time for the government to end assistance to those who are struggling, particularly when wealthy oil companies have yet to pay their fair share.

In the time it took you to read this article, big oil made more than $800,000. So next time you fork over $4 for a gallon of gas, think about the $4 billion that Congress willingly hands to dirty oil each year. Which is the bigger outrage?

Update: The Senate last night voted on a bill to end billions of dollars worth of oil subsidies. The bill, written by Senator Robert Menendez (D-N.J.), was defeated by a vote of 52-48, with 3 Democrats joining Republicans to kill the measure.

WASHINGTON -- A ceremonial vote over whether to end subsidies to major oil companies failed on Tuesday, with 45 Republicans and three Democrats voting to continue the tax incentives to the five largest oil companies.

Atlhough the 52-48 vote broke down mostly along party lines, Republican Sens. Olympia Snowe and Susan Collins of Maine split with the rest of the GOP to support the effort to repeal oil subsidies. Democratic Sens. Ben Nelson (D-Neb.), Mary Landrieu (D-La.) and Mark Begich (D-Alaska), voted against the bill.

Still, the debate over whether to end the subsidies is unlikely to die with Tuesday's vote. Senate Majority Leader Harry Reid (D-Nev.) vowed to continue pushing for the government to end the series of tax credits to five oil companies, which Democrats say could produce $21 billion over the next decade.

"I am confident that before we finish our budget negotiations here, and in anticipation of raising the debt ceiling, that that will be part of it," Reid said at a midday press conference.

The bill would have cut $12 billion in subsidies for producing oil within the United States for Chevron, Shell Oil, BP America, ConocoPhillips, Exxon Mobile. Another $6 billion would come from eliminating credits for taxes that the oil companies pay to foreign governments, with the final $2 billion from blocking them from writing off certain drilling and development costs.

Republicans said the bill would unfairly single out oil companies, harming their ability to hire American workers, and drive up the United States’ dependence on foreign oil.

“Our oil and gas industry is an industry that creates jobs,” Sen. Kay Bailey Hutchison (R-Texas) said on the Senate floor. “We ought to be giving every possible fair break to companies that hire in America.”

Sen. Orrin Hatch (R-Utah) said the bill was an effort to bring in more government revenue and not reduce the deficit.

“Let’s be clear about what’s going on here: Democrats want to raise taxes to pay for more government spending,” he said.

But Democrats say subsidies are unnecessary given the high price of gas, arguing the oil companies should be paying more taxes because they are making large profits -- a statement that has been echoed by at least one former industry leader. John Hofmeister, former president of Shell Oil, said in February that high gas prices mean that major oil companies do not need more incentives in the form of subsidies to produce in the United States.

Sen. Jay Rockefeller (D-W.Va.) criticized the CEOs of the five biggest oil companies, who appeared last week before the Senate Finance Committee. At that committee hearing, all five said they were against efforts to end the tax credits, which would cut about $2 billion from their profits each year, he said.

“They are so caught up in their profits that they have lost sight of what is happening...on Main Street and around the kitchen table,” Rockefeller said on the Senate floor before the vote. “If they had expressed concern for people and then refused to give up their subsidies...at least that would have been a bend.”

Even if the bill had passed, it would likely have run up against problems over its constitutionality, as Talking Points Memo's Brian Beutler pointed out. The bill would have increased revenue, running afoul of a rule that says revenue-increasing measures must originate in the House of Representatives.

But Democrats are eager to put Republicans on the record in support for oil subsidies, particularly when some GOP members have said in the past they would support ending them. House Democrats forced a similar vote earlier this month, which failed to gain Republican support.

Several Senate Republicans who previously expressed support for ending the subsidies voted against the bill Tuesday, arguing it was a political ploy by Democrats rather than an effort to lower gas prices or pay down the deficit. Sen. Lindsey Graham (R-S.C.), who has spoken out against the subsidies in the past, said on Tuesday he would vote “with his party” because he believes “oil subsidies should be part of a bigger package.”

Republicans will offer a ceremonial vote on their own on Wednesday, when the Senate will vote on a bill to expand offshore drilling. That bill, offered by Senate Minority Leader Mitch McConnell (R-Ky.) is also expected to fail.

House Budget Committee Chair Paul Ryan proposes to undermine the integrity of the Medicare and Medicaid programs, with an eye toward enriching the insurance companies that so generously fund his campaigns.

The American people are not amused. They have sent clear signals that they want to maintain Medicare and Medicaid.

Ryan’s town hall meetings in April featured noisy opposition in communities such as Milton and Kenosha, and tough questioning even in the most conservative communities of Walworth County. Likewise, Republican House members from Pennsylvania, Florida and other states got earfuls at their town meetings.

The protests at the meetings were just the tip of the iceberg of objection to the plan championed by Ryan, R-Janesville.

Polls show that roughly 80 percent of voters think it is a bad idea to try to balance the budget by gutting Medicare and Medicaid as Ryan proposes — with a scheme to force seniors to buy coverage from private, for-profit insurance companies that happen to be major contributors to his campaign fund. Overwhelming majorities say that they would prefer that Congress end tax cuts for wealthy Americans and reduce Pentagon spending before making any changes to Medicare and Medicaid.

And rightly so. Despite the battering they have taken from misguided and malicious policymakers, the Medicare and Medicaid programs still provide the rough outlines for a single-payer health care program that keep costs down while expanding access to prevention and treatment for millions of Americans.

So, instead of gutting Medicare, as Ryan proposes, why not expand on what works?

That’s what Vermont Sen. Bernie Sanders is proposing.

“The United States is the only major nation in the industrialized world that does not guarantee health care as a right to its people. Meanwhile, we spend about twice as much per capita on health care with worse results than others that spend far less,” Sanders explained recently as he announced plans to introduce the American Health Security Act of 2011, which would provide federal guidelines and strong minimum standards for states to administer single-payer health care programs. “It is time that we bring about a fundamental transformation of the American health care system. It is time for us to end private, for-profit participation in delivering basic coverage. It is time for the United States to provide a Medicare-for-all single-payer health coverage program.”

Sanders’ plan is the right response to the health care crisis in America — and any country where tens of millions of citizens lack health care coverage, where tends of millions more lack adequate coverage, and where costs are skyrocketing because of insurance company profiteering.

Don’t get the independent senator wrong. He voted for the health care reform legislation that passed Congress last year and was signed by President Obama. He even improved that legislation by fighting to include funding for public health programs and community clinics.

But Sanders also recognizes flaws in the 2010 reform — which, reformers note, keeps the for-profit private health insurance industry at the center of the U.S. health system. And the senator argues that the ultimate cure for what ails American health care is a “Medicare for all” approach that ends the profiteering and focuses on prevention and treatment of disease.

And he is not alone.

Congressman Jim McDermott, the Washington Democrat who has for two decades been one of the House’s steadiest backers of real health care reform, will introduce a parallel bill in that chamber. Says McDermott: “The (2010) health care law made big progress toward covering many more people and finding ways to lower cost. However, I think the best way to reduce costs and guarantee coverage for all is through a single-payer system like Medicare. This bill does just that — it builds on the new health care law by giving states the flexibility they need to go to a single-payer system of their own. It will also reduce costs, and Americans will be healthier.”

The Sanders-McDermott initiative in Washington comes as the Vermont legislature has taken steps to make the senator’s home state the first in the nation to develop what advocates describe as a state-based variation on the single-payer approach. Sanders applauds the move, and thinks it could serve as a national model. Others agree, while noting that Medicare provides another model.

Sanders and McDermott were joined at the announcement of their new “Medicare for all” push by Arlene Holt Baker, executive vice president of the AFL-CIO; Jean Ross, co-president of National Nurses United; and Greg Junemann, president of the International Federation of Professional and Technical Engineers. All three groups are encouraging this fight for real reform.

“Providing a single standard of high-quality care for all is a priority for registered nurses, who have seen their abilities to act as patient advocates made more difficult as for-profit interests control more patient care decisions,” says Ross, whose union has been in the forefront of the fight for single-payer. “We commend Senator Sanders and Representative McDermott for their vision and passion to help registered nurses create a more just health care system through the American Health Security Act and applaud our brothers and sisters in labor for their support.”

Physicians for a National Health Program, the movement of doctors and medical students for real reform, welcomed the national legislation.

“At a time when the airwaves are filled with talk about cutting or even ending Medicare,” said Dr. Garrett Adams, PNHP president, “Senator Sanders has boldly stepped forward with the seemingly paradoxical proposition that the best way to financially strengthen the Medicare program is to upgrade it and expand it to cover everyone.”

Forty years ago, wealthy Americans financed the U.S. government mainly through their tax payments. Today wealthy Americans finance the government mainly by lending it money. While foreigners own most of our national debt, over 40 percent is owned by Americans – mostly the very wealthy.

This great switch by the super rich – from paying the government taxes to lending the government money — has gone almost unnoticed. But it’s critical for understanding the budget predicament we’re now in. And for getting out of it.

Over that four decades, tax rates on the very rich have plummeted. Between the end of World War II and 1980, the top tax bracket remained over 70 percent — and even after deductions and credits was well over 50 percent. Now it’s 36 percent. As recently as the late 1980s, the capital gains rate was 35 percent. Now it’s 15 percent.

Not only are rates lower now, but loopholes are bigger. 18,000 households earning more than a half-million dollars last year paid no income taxes at all. In recent years, according to the IRS, the richest 400 Americans have paid only 18 percent of their total incomes in federal income taxes. Billionaire hedge-fund and private-equity managers are allowed to treat much of their incomes as capital gains (again, at 15 percent).

Meanwhile, more and more of the nation’s income and wealth have gone to the top. In the late 1970s, the top 1 percent took home 9 percent of total national income. Now the top 1 percent’s take is more than 20 percent. Over the same period, the top one-tenth of one percent has tripled its share.

Wealth is even more concentrated at the top — more concentrated than at any time since the Gilded Age of the late 19th century.

So what are America’s super rich doing with all this money? They’re investing it all over the world, wherever they can get the best return for any given level of risk. Treasury bills – essentially loans to the U.S. government — have proven good and safe investments, particularly during these last few tumultuous years.

You hear a lot of worries about foreigners dumping Treasuries if they lose confidence in the dollar because of our future budget deficits. What you hear less about are these super-rich Americans, who are just as likely to abandon Treasuries if spooked by future budget deficits.

The great irony is if America’s super rich financed the U.S. government the way they used to – by paying taxes rather than lending the government money – that long-term budget deficit would be far lower.

This is why a tax increase on the super rich must be part of any budget agreement. Otherwise the great switch by the super rich will make the income and wealth gap far wider.

Worse yet, average working Americans who can least afford it will either lose the services they depend on, or end up with a tax burden they cannot bear.

May 18, 2011

Fiscal watchdog Taxpayers for Common Sense said Tuesday that a proposal by Democrats to eliminate a series of tax breaks for the five largest oil companies doesn’t go far enough.

“Congress needs to go further," Taxpayers for Common Sense Vice President Steve Ellis said. "We cannot afford to just look at a few subsidies for a handful of companies. We need to eliminate all of these subsidies as part of an effort to deal with our nation’s fiscal crisis.”

The bill is not expected to get the 60 votes necessary for passage. But debate on the legislation has ignited a firestorm in Washington over tax breaks and deficit reduction.

Democrats say their bill will save $21 billion over 10 years and the savings will go toward deficit reduction.

But Republicans and some Democrats say the legislation is akin to raising taxes on the oil industry and singling out profitable companies for unfair treatment.

Americans for Tax Reform warned senators Tuesday that a vote in favor of the bill would break a pledge signed by most Republicans to oppose tax hikes.

Taxpayers for Common Sense released a report Tuesday that says the oil-and-gas industry will enjoy more than $78 billion in tax breaks over the next five years.

In a time of jaw-dropping deficits, taxpayers are being forced to line the pockets of Big Oil while they rake in massive profits,” Ellis said. “Oil-and-gas companies should pay their fair share.”

Ellis said Taxpayers for Common Sense is in favor of eliminating tax breaks for a range of energy industries including the wind and solar industries. "Right now, oil and gas is a good place to start," he said.

It’s college commencement season in America, a time of excitement and celebration. For the millions who will graduate this year, the events of this month and next represent not just the end of college but the beginning of a new and meaningful chapter in their lives.

That chapter, for most, however, will be accompanied by hefty student loan payments. According to the Wall Street Journal, the average debt for a bachelor’s degree recipient in 2011 will reach almost $23,000, making this year’s graduating class the most debt-burdened in history. In fact, student loan debt is expected to outpace credit card debt, probably reaching more than $1 trillion this year.

This is partly a function of tuition, which the Wall Street Journal reports has increased at a rate of 5 percent a year. It is also a function of a flailing economy in which parents are far less able to help their children pay for college. It’s no wonder that a staggering 85 percent of 2011 college graduates are moving back home after graduation.

Still, for many, if not most, college students, the decision to take out loans to pay for a college degree will be one of the most important investments they will ever make in their future, and the cost of repayment, while historically high, will be worth it. Last month’s jobs report found that the unemployment rate among college graduates was 4.5 percent, half of the national unemployment rate. And according to a College Board report cited by the New York Times, the median bachelor’s degree recipient working full-time in 2008 made 65 percent more than the median high school graduate.

But there is a growing group of students who will find a harsh reality when they enter — or at least try to enter — the workforce. These are the students who have enrolled in the growing industry of for-profit colleges.

For-profit colleges aren’t new to the national landscape, but over the past decade their numbers have surged dramatically, creating a $23 billion industry. In 2000, about 670,000 students were enrolled in for-profit colleges. By 2008, nearly 1.8 million were enrolled, a 225 percent increase.

These companies make their profits by aggressively recruiting students and pushing them to take out large federal loans to cover the cost of tuition. Seventy-seven percent of the revenue at the five largest for-profits comes from federal student loans and grants.

That cost of attendance isn’t cheap. According to Forbes columnist Susan Adams, tuition at for-profits is twice as high as in-state public colleges and about five times as high as two-year public colleges. And while for-profits educate 11 percent of U.S. post-secondary students, those students hold 26 percent of the nation’s student loans and make up 43 percent of those who default.

The problem for these students is not just that they are being strapped with outrageously high debt. It’s that they are being preyed upon, misled into enrolling at institutions that often lack accreditation and have dismal records of job placement. The University of Phoenix, for example, quadrupled its enrollment over an eight-year period by targeting vulnerable students to join its ranks. That group, according to Bloomberg News reporter Dan Golden, included an intellectually disabled woman with an IQ between 65 and 70, who, not coincidentally, qualified for federal aid.

There may be no more egregious example of corporate interests preying on the innocent on behalf of their shareholders than the for-profit college industry. The consequences are even worse than those stemming from predatory mortgage lenders; unlike a mortgage, student loan debt cannot be discharged in bankruptcy. Students who are deceived into enrolling in for-profit institutions are left with no exit — and no recourse. It is a tragedy of the highest degree, counter to our nation’s values. And it must be stopped.

At least 16 states have passed or proposed laws regulating for-profit colleges . The Obama administration, too, is working to regulate the industry. New rules will take effect in July that will prevent for-profits from paying recruiters based on the number of students they enroll, a process that encourages deceptive practices.

The Education Department is also considering what’s known as a “gainful employment” rule, which would prevent for-profits that fail to meet certain standards from being eligible for federal financial aid programs. The ineligible group would include colleges with high student-loan default rates and ones at which students end up having to put a large part of their salaries toward paying down their debt. But that important rule, which was supposed to be implemented in 2010, has been delayed. The Education Department now says it will take effect in 2012, but many who follow the issue closely remain skeptical.

That’s because for-profit colleges are fighting tooth-and-nail to prevent the rules from taking effect. According to the Sunlight Foundation, in 2010, the industry spent $7.57 million on lobbying, which was more than three times what was spent in 2009. It also contributed more than $1.3 million to political campaigns. The industry’s efforts are only expected to intensify. So, too, must the efforts of those fighting for legislation to rein in the for-profits.

Our debt “crisis” has become something of a national obsession — and a misplaced one at that. For all the talk of debts and deficits, we too often ignore this crisis, the real debt crisis, and its impact on millions of Americans. We owe them better.

May 17, 2011

Technically, the federal government has now reached the limit of its capacity to borrow money.

Raising the debt ceiling used to be a technical adjustment, made almost automatically. Now it’s a political football.

Democrats should never have agreed to linking it to an agreement on the long-term budget deficit.

But now that the debt ceiling is in play, there’s no end to what the radical right will demand. John Boehner is already using the classic “they’re making me” move, seemingly helpless in the face of Tea Party storm troopers who refuse to raise the ceiling unless they get their way. Their way is reactionary and regressive – eviscerating Medicare, cutting Medicaid and programs for the poor, slashing education and infrastructure, and using most of the savings to reduce taxes on the rich.

If the only issue were cutting the federal deficit by four or five trillion dollars over the next ten years, the President and Democrats wouldn’t have to cave in to this extortion. That goal can be achieved by doing exactly the opposite of what radical Republicans are demanding. We can reduce the long-term budget deficit, keep everything Americans truly depend on, and also increase spending on education and infrastructure — by cutting unnecessary military expenditures, ending corporate welfare, and raising taxes on the rich.

I commend to you the “People’s Budget,” a detailed plan for doing exactly this – while reducing the long-term budget deficit more than either the Republican’s or the President’s plan does. When I read through the People’s Budget my first thought was how modest and reasonable it is. It was produced by the House Progressive Caucus but could easily have been generated by Washington centrists – forty years ago.

But of course the coming battle isn’t really over whether to cut the long-term deficit by trillions of dollars. It’s over whether to shrink the government we depend on and to use the savings to give corporations and the super-rich even more tax benefits they don’t need or deserve.

The main reason the “center” has moved so far to the right – and continues to move rightward – is radical conservatives have repeatedly grabbed the agenda and threatened havoc if they don’t get their way. They’re doing it again.

Will the President and congressional Democrats cave in to their extortion? When even Nancy Pelosi says “everything is on the table” you’ve got to worry.

We can fortify the President and congressional Democrats and prevent them from moving further right by doing exactly what the Tea Partiers are doing — but in reverse.

Call it budget Jujitsu.

The message from the “People’s Party” should be unconditional: No cuts in Medicare and Medicaid or Social Security. More spending on education and infrastructure. Pay for it and reduce the long-term budget deficit by cutting military spending and raising taxes on the rich. The People’s Budget is the template.

But what if the President and Dems show signs of caving? This is the heart of the progressive dilemma. Are we prepared to say no to raising the debt ceiling our demands aren’t met? That way, the responsibility for rounding up the necessary Republican votes shifts to Wall Street and big business — arguably more eager to raise the debt ceiling and avoid turmoil in credit markets than anyone else. They’re also better able to push the GOP — whom they fund.

Which leads to a more basic question: Are we ready and willing to mount primary challenges to incumbent Democrats who cave?

To hear Official Washington tell it, Indiana Gov. Mitch Daniels is the new “serious” Republican presidential contender. He’s praised as a “fiscal conservative” who isn’t obsessed with the Right’s divisive social agenda nor marred by the crazy “birther” conspiracy theories.

Mentioned only in passing is a key fact that – in a saner world – would disqualify him from holding any government office: Mitch Daniels was President George W. Bush’s original budget director in 2001.

In other words, the “fiscal conservative” Daniels oversaw the federal budget as it was making its precipitous dive from a $236 billion surplus – then on a trajectory to eliminate the entire federal debt in a decade – to a $400 billion deficit by the time he left in June 2003.

Plus, because of proposals developed on Daniels’s watch – such as tax cuts favoring the rich and unpaid-for projects, including the invasion of Iraq and a new prescription drug plan – the fiscal situation of the federal government continued to sink over the ensuing years, plunging to a trillion-dollar-plus annual deficit by the time Bush left office in 2009.

Though Daniels was surely not at fault for all the elements in this budgetary catastrophe, he was a central player in the early stages of the process. A former political operative for Ronald Reagan and an Eli Lilly pharmaceutical executive, Daniels was the salesman who pitched and defended Bush’s plans.

Certainly, Mitch Daniels was no David Stockman, President Reagan’s first budget director who sounded the alarm two decades earlier when he saw an ocean of red ink looming in the nation’s future.

And it wasn’t as if Daniels and other figures in the Bush administration weren’t warned about the need for continued fiscal discipline.

President Bill Clinton, in his farewell address to the nation on Jan. 18, 2001, noted how his administration had managed to turn what were then record deficits – left over by Republicans Ronald Reagan and George H.W. Bush – into record surpluses.

“We’ve been able to pay down $600 billion of our national debt – on track to be debt-free by the end of the decade for the first time since 1835,” Clinton said, adding that a debt-free America would enjoy many economic benefits including lower interest rates and the capacity to address “big challenges,” such as the retirement costs from the “baby-boomers.”

However, with Daniels at the budget helm, the Bush administration quickly veered off-course and onto the rocks of a worsening debt crisis. Much of the expected surplus was squandered with huge tax cuts, leaving the nation vulnerable to unexpected economic and policy shocks like those that followed the 9/11 attacks.

In the 10 years since Clinton left office, the projected $2 trillion surplus by 2011 gave way to today’s $10 trillion debt, what the Washington Post recently called “a $12 trillion detour.”

The Post’s May 1 story by Lori Montgomery began, “The nation’s unnerving descent into debt began a decade ago with a choice, not a crisis. … Voices of caution were swept aside in the rush to take advantage of the apparent bounty. Political leaders chose to cut taxes, jack up spending and, for the first time in U.S. history, wage two wars solely with borrowed funds.”

Iraq Miscalculation

Daniels, who had very little experience in budgeting and was most adept at policy promotion, directly contributed to one of those budget blunders, the gross underestimation of the cost of the Iraq War.

In 2002, Daniels famously low-balled the war’s cost at $50 billion to $60 billion and joined in the repudiation of Bush’s economic adviser Lawrence Lindsey, who had ventured an estimate as high as $200 billion. Daniels called Lindsey’s price tag “very, very high.”

But it turned out that even Lindsey’s estimate, which led to his firing later that year, was very, very low. As of fiscal 2011, the Congressional Research Service reported that the Iraq War had cost $806 billion, with estimates putting the eventual total cost of the conflict at over $1 trillion.

Though Daniels’s defenders say it is unfair to blame him for all of Bush’s policy decisions, Daniels was “a key figure in the administration, helping design policies and pressing publicly for their enactment,” Salon.com’s Brendan Nyhan reported in a Feb. 12, 2002, article.

Besides citing Daniels’s political role in pushing through Bush’s deficit-oriented policies, Nyhan noted that Daniels’s appointment to run the Office of Management and Budget marked an important evolution in the role of budget director from accounting wonk to political marketer.

“It is another sign of the importance P.R. tactics play in American politics,” Nyhan wrote. “The OMB director — once a budget expert — is now an operative chosen for his political skills, particularly his ability to sell the administration’s economic proposals in the media.

“In August [2001], Daniels admitted as much, telling the Wall Street Journal that ‘[t]o the extent I bring anything … to this job, maybe it’s an ability to think about how a product, whether it’s Prozac or a president’s proposal, is marketed.’ Predictably, he has displayed a disturbing tendency to make dishonest claims for political advantage on federal budget issues.”

For instance, Nyhan noted that Daniels first promoted the Bush tax cuts as a way to “share some of this large overcharge [the surplus] with the American people,” but later he repackaged it as an economic stimulus. He also blamed the sudden $1.345 trillion drop in the projected surplus on various economic and technical factors, but the Congressional Budget Office cited the tax cut’s $1.7 trillion price tag.

In his hard sell for Bush’s policies, Daniels also was not above hitting his opponents below the political belt. In December 2001, he denounced Democratic “tax and spend extremists” as “people for whom taxes can’t be high enough and we can never spend too much government money.”

Cooking the Books

Daniels also was ready to stoop to accounting trickery to make Bush’s budgets seem less irresponsible.

“In the federal budget process, [Daniels’s] OMB has employed a number of accounting devices and misleading assumptions to conceal the true costs of tax cuts, restore budgets to balance artificially and otherwise tried to achieve political ends by tricky budgetary means,” Nyhan wrote.

“In the Bush budget plan, for example, the administration projects a return to surpluses in 2004 or 2005, but this ignores the cost of extending a provision protecting millions of middle income taxpayers from a tax increase under the individual alternative minimum tax. …

“It is a matter of serious public concern that the federal budget director has become just another spinner dragging down public debate. Though he is a political appointee heading an executive agency, Daniels is also a public official with a larger responsibility to promote honesty in federal budget debates.

“But after more than a year at his position, he still frequently makes deceptive claims often without challenge. Daniels may not recognize the difference from his previous job [as a pharmaceutical executive], but we must. It is unacceptable to market our nation’s economic policies like Prozac. “

Yet, Daniels continues to lead a charmed life as far as Official Washington is concerned. From Fox News to MSNBC, he is praised as a “fiscal conservative” who would uplift the debate over the nation’s debt crisis. He is widely praised for his work as Indiana’s governor and – although his title as Bush’s budget director is mentioned in passing – his work on some of the most reckless budgets in U.S. history escapes scrutiny.

Much more attention has been spent on his supposedly uncharacteristic deviation as Indiana’s governor into enacting some of the nation’s harshest anti-abortion rules and other right-wing social legislation. There’s also been some coverage of his off-again-on-again marriage and whether his wife wants him to seek the White House.

But Daniels stands today as the latest Republican hailed for his wisdom and courage regarding budget issues.

He follows Rep. Paul Ryan, R-Wisconsin, the House Budget Committee chairmen whose inside-the-beltway reputation as a “serious” thinker only collapsed when the voters got a look at his plan for “saving” Medicare – by killing the current government-run system and replacing it with a private-sector voucher approach – while demanding still more tax cuts for the rich.

The fact that the Republicans, including Daniels and Ryan, were major supporting players in George W. Bush’s diversion of the United States from its course a decade ago toward a debt-free government – indeed one with a sizeable surplus — to one burdened with the largest debt in the history of the world is never mentioned.

Six months ago President Obama faced a hostage situation. Republicans threatened to block an extension of middle-class tax cuts unless Mr. Obama gave in and extended tax cuts for the rich too. And the president essentially folded, giving the G.O.P. everything it wanted.

Now, predictably, the hostage-takers are back: blackmail worked well last December, so why not try it again? This time House Republicans say they will refuse to raise the debt ceiling — a step that could inflict major economic damage — unless Mr. Obama agrees to large spending cuts, even as they rule out any tax increase whatsoever. And the question becomes what, if anything, will get the president to say no.

The debt ceiling itself is a strange feature of U.S. law: since Congress must vote to authorize spending and choose tax rates, why have a second vote on whether to allow the borrowing that these spending and taxation policies imply? In practice, however, legislators have historically been willing to raise the debt ceiling as necessary, so this quirk in our system hasn’t mattered very much — until now.

What has changed? The answer is the radicalization of the Republican Party. Normally, a party controlling neither the White House nor the Senate would acknowledge that it isn’t in a position to impose its agenda on the nation. But the modern G.O.P. doesn’t believe in following normal rules.

So what will happen if the ceiling isn’t raised? It has become fashionable on the right to assert that it would be no big deal. On Saturday the editorial page of The Wall Street Journal ridiculed those worried about the consequences of hitting the ceiling as the “Armageddon lobby.”

It’s hard to know whether the “what, us worry?” types believe what they’re saying, or whether they’re just staking out a bargaining position. But in any case, they’re almost surely wrong: seriously bad consequences will follow if the debt ceiling isn’t raised.

For if we hit the debt ceiling, the government will be forced to stop paying roughly a third of its bills, because that’s the share of spending currently financed by borrowing. So will it stop sending out Social Security checks? Will it stop paying doctors and hospitals that treat Medicare patients? Will it stop paying the contractors supplying fuel and munitions to our military? Or will it stop paying interest on the debt?

Don’t say “none of the above.” As I’ve written before, the federal government is basically an insurance company with an army, so I’ve just described all the major components of federal spending. At least one, and probably several, of these components will face payment stoppages if federal borrowing is cut off.

And what would such payment stops do to the economy? Nothing good. Consumer spending would probably crash, as nervous seniors started wondering how to pay for rent and food. Businesses that depend on government purchases would slash payrolls and cancel investments.

Furthermore, markets might well panic, especially if interest payments are missed. And the consequences of undermining faith in U.S. debt might be especially severe because that debt plays a crucial role in many financial transactions.

So hitting the debt ceiling would be a very bad thing. Unfortunately, it may be unavoidable.

Why? Because this is a hostage situation. If the president and his allies operate on the principle that failure to raise the debt ceiling is an unthinkable outcome, to be avoided at all cost, then they have ceded all power to those willing to bring that outcome about. In effect, they will have ripped up the Constitution and given control over America’s government to a party that only controls one house of Congress, but claims to be willing to bring down the economy unless it gets what it wants.

Now, there are good reasons to believe that the G.O.P. isn’t nearly as willing to burn the house down as it claims. Business interests have made it clear that they’re horrified at the prospect of hitting the debt ceiling. Even the virulently anti-Obama U.S. Chamber of Commerce has urged Congress to raise the ceiling “as expeditiously as possible.” And a confrontation over spending would only highlight the fact that Republicans won big last year largely by promising to protect Medicare, then promptly voted to dismantle the program.

But the president can’t call the extortionists’ bluff unless he’s willing to confront them, and accept the associated risks.

According to Harry Reid, the Senate majority leader, Mr. Obama has told Democrats not to draw any “line in the sand” in debt negotiations. Well, count me among those who find this strategy completely baffling. At some point — and sooner rather than later — the president has to draw a line. Otherwise, he might as well move out of the White House, and hand the keys over to the Tea Party.

Paul Krugman is professor of Economics and International Affairs at Princeton University and a regular columnist for The New York Times. Krugman was the 2008 recipient of the Nobel Prize in Economics. He is the author of numerous books, including The Conscience of A Liberal, and his most recent, The Return of Depression Economics.

May 16, 2011

WASHINGTON -- A set of confidential federal audits accuse the nation’s five largest mortgage companies of defrauding taxpayers in their handling of foreclosures on homes purchased with government-backed loans, four officials briefed on the findings told The Huffington Post.

The five separate investigations were conducted by the Department of Housing and Urban Development’s inspector general and examined Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial, the sources said.

The audits accuse the five major lenders of violating the False Claims Act, a Civil War-era law crafted as a weapon against firms that swindle the government. The audits were completed between February and March, the sources said. The internal watchdog office at HUD referred its findings to the Department of Justice, which must now decide whether to file charges.

The federal audits mark the latest fallout from the national foreclosure crisis that followed the end of a long-running housing bubble. Amid reports last year that many large lenders improperly accelerated foreclosure proceedings by failing to amass required paperwork, the federal agencies launched their own probes.

The resulting reports read like veritable indictments of major lenders, the sources said. State officials are now wielding the documents as leverage in their ongoing talks with mortgage companies aimed at forcing the firms to agree to pay fines to resolve allegations of routine violations in their handling of foreclosures.

The audits conclude that the banks effectively cheated taxpayers by presenting the Federal Housing Administration with false claims: They filed for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents.

Two of the firms, including Bank of America, refused to cooperate with the investigations, according to the sources. The audit on Bank of America finds that the company -- the nation’s largest handler of home loans -- failed to correct faulty foreclosure practices even after imposing a moratorium that lifted last October. Back then, the bank said it was resuming foreclosures, having satisfied itself that prior problems had been solved.

According to the sources, the Wells Fargo investigation concludes that senior managers at the firm, the fourth-largest American bank by assets, broke civil laws. HUD’s inspector general interviewed a pair of South Carolina public notaries who improperly signed off on foreclosure filings for Wells, the sources said.

The investigations dovetail with separate probes by state and federal agencies, who also have examined foreclosure filings and flawed mortgage practices amid widespread reports that major mortgage firms improperly initiated foreclosure proceedings on an unknown number of American homeowners.

The FHA, whose defaulted loans the inspector general probed, last May began scrutinizing whether mortgage firms properly treated troubled borrowers who fell behind on payments or whose homes were seized on loans insured by the agency.

A unit of the Justice Department is examining faulty court filings in bankruptcy proceedings. Several states, including Illinois, are combing through foreclosure filings to gauge the extent of so-called “robo-signing” and other defective practices, including illegal home repossessions.

Representatives of HUD and its inspector general declined to comment.

The internal audits have armed state officials with a powerful new weapon as they seek to extract what they describe as punitive fines from lawbreaking mortgage companies.

A coalition of attorneys general from all 50 states and state bank supervisors have joined HUD, the Treasury Department, the Justice Department and the Federal Trade Commission in talks with the five largest mortgage servicers to settle allegations of illegal foreclosures and other shoddy practices.

The five giant mortgage servicers, which collectively handle about three of every five home loans, offered during a contentious round of negotiations last Tuesday to pay $5 billion to set up a fund to help distressed borrowers and settle the allegations.

That offer -- also floated by the Office of the Comptroller of the Currency in February -- was deemed much too low by state and federal officials. Associate U.S. Attorney General Tom Perrelli, who has been leading the talks, last week threatened to show the banks the confidential audits so the firms knew the government side was not “playing around,” one official involved in the negotiations said. He ultimately did not follow through, persuaded that the reports ought to remain confidential, sources said. Through a spokeswoman, Perrelli declined to comment.

Most of the targeted banks have not seen the audits, a federal official said, though they are generally aware of the findings.

Some agencies involved in the talks are calling for the five banks to shell out as much as $30 billion, with even more costs to be incurred for improving their internal operations and modifying troubled borrowers’ home loans.

But even that number would fall short of legitimate compensation for the bank's harmful practices, reckons the nascent federal Bureau of Consumer Financial Protection. By taking shortcuts in processing troubled borrowers' home loans, the nation's five largest mortgage firms have directly saved themselves more than $20 billion since the housing crisis began in 2007, according to a confidential presentation prepared for state attorneys general by the agency and obtained by The Huffington Post in March. Those pushing for a larger package of fines argue that the foreclosure crisis has spawned broader -- and more costly -- social ills, from the dislocation of American families to the continued plunge in home prices, effectively wiping out household savings.

The Justice Department is now contemplating whether to use the HUD audits as a basis for civil and criminal enforcement actions, the sources said. The False Claims Act allows the government to recover damages worth three times the actual harm plus additional penalties.

Justice officials will soon meet with the largest servicers and walk them through the allegations and potential liability each of them face, the sources said.

Earlier this month, Justice cited findings from HUD investigations in a lawsuit it filed against Deutsche Bank AG, one of the world's 10 biggest banks by assets, for at least $1 billion for defrauding taxpayers by "repeatedly" lying to FHA in securing taxpayer-backed insurance for thousands of shoddy mortgages.

In March, HUD's inspector general found that more than 49 percent of loans underwritten by FHA-approved lenders in a sample did not conform to the agency's requirements.

Last October, HUD Secretary Shaun Donovan said his investigators found that numerous mortgage firms broke the agency’s rules when dealing with delinquent borrowers. He declined to be specific.

The agency’s review later expanded to flawed foreclosure practices. FHA, a unit of HUD, could still take administrative action against those firms for breaking FHA rules based on its own probe.

The confidential findings appear to bolster state and federal officials in their talks with the targeted banks. The knowledge that they may face False Claims Act suits, in addition to state actions based on a multitude of claims like fraud on local courts and consumer violations, will likely compel the banks to offer the government more money to resolve everything.

But even that may not be enough.

Attorneys general in numerous states, armed with what they portray as incontrovertible evidence of mass robo-signings from preliminary investigations, are probing mortgage practices more closely.

The state of Illinois has begun examining potentially-fraudulent court filings, looking at the role played by a unit of Lender Processing Services. Nevada and Arizona already launched lawsuits against Bank of America. California is keen on launching its own suits, people familiar with the matter say. Delaware sent Mortgage Electronic Registration Systems Inc., which runs an electronic registry of mortgages, a subpoena demanding answers to 75 questions. And New York’s top law enforcer, Eric Schneiderman, wants to conduct a complete investigation into all facets of mortgage banking, from fraudulent lending to defective securitization practices to faulty foreclosure documents and illegal home seizures.

A review of about 2,800 loans that experienced foreclosure last year serviced by the nation's 14 largest mortgage firms found that at least two of them illegally foreclosed on the homes of "almost 50" active-duty military service members, a violation of federal law, according to a report this month from the Government Accountability Office.

Those violations are likely only a small fraction of the number committed by home loan companies, experts say, citing the small sample examined by regulators.

In an April report on flawed mortgage servicing practices, federal bank supervisors said they “could not provide a reliable estimate of the number of foreclosures that should not have proceeded."

The review of just 2,800 home loans in foreclosure compares with nearly 2.9 million homes that received a foreclosure filing last year, according to RealtyTrac, a California-based data provider.

“The extent of the loss cannot be determined until there is a comprehensive review of the loan files and documentation of the process dealing with problem loans,” Bair said last week, warning of damages that could take “years to materialize.”

Home prices have fallen over the past year, reversing gains made early in the economic recovery, according to data providers Zillow.com and CoreLogic. Sales of new homes remain depressed, according to the Commerce Department. More than a quarter of homeowners with a mortgage owe more on that debt than their home is worth, according to Zillow.com. And more than 2 million homes are in foreclosure, according to Lender Processing Services.

Rather than punishing banks for misdeeds, the administration is now focused on helping troubled borrowers in the hope that it will stanch the flood of foreclosures and increase consumer confidence, officials involved in the negotiations said.

Levying penalties can't accomplish that goal, an official involved in the foreclosure probe talks argued last week.

For their part, however, state officials want to levy fines, according to a confidential term sheet reviewed last week by HuffPost. Each state would then use the money as it desires, be it for facilitating short sales, reducing mortgage principal, or using the funds to help defaulted borrowers move from their homes into rentals.

In a report last week, analysts at Moody’s Investors Service predicted that while the losses incurred by the banks will be “sizable,” the credit rating agency does “not expect them to meaningfully impact capital.”

The huge crowd of a couple thousand, as viewed from the stage. The pink flags represent pink slips received by over 4100 teachers from Southern California. (All photos by Frank Gormlie.)

Since Andy Cohen covered the meat and potatoes of the teachers’ “State of Emergency” rally already, I wanted to share some other thoughts about the event and display a sampling of the numerous photos I took yesterday, Friday the 13th while at the Embarcadero in downtown San Diego.

Crowd bound for the rally.

When I heard that the rally was going to be at the Embarcadero, I told Patty that parking would be horrendous downtown and next to impossible, so we agreed to take the trolley from Lemon Grove. She wrapped up our banner, we gathered our camera and notepad, and we hopped the 3:44 pm trolley (although by time it got to us, it was 3:50). After grabbing our seats, we looked around and saw several women wearing red T-shirts that spelled out “STOP” – Students and Teachers Our Priority. And during the ride downtown, we heard several guys who were standing up having quite an intellectual conversation – even hearing the name “Chomsky” come bouncing out. Are these teachers? we wondered on their way to the rally.

Sure enough, once the trolley pulled up to the Seaport Marina station, the entire car stood up and got off. And everyone began heading to the Embarcadero. This was great! I thought. An entire trolley from east county going to the same rally. As we crossed the tracks and Harbor Drive, we were a march in and of ourselves.

The "counter-demonstration" just a few minutes before they were to begin. The woman in red is the Koch brothers' rep.

As our little parade moved into the park, I took a right turn and headed over to the counter-rally. I had heard the Koch brothers’ Americans for Prosperity, the Young Republicans, and some tea party types were going to be holding a nearby demonstration against us and the teachers. A protest of the protest. As I approached this sideshow, I noticed almost more video cameras than people. Once in their midst, I did count twelve actual counter-demonstrators. A red-suited woman was bouncing around, saying she represented Americans for Prosperity. I asked her when her rally was going to begin. At 5 she said. One guy asked who I was – I had an OB Rag T-shirt on and was taking photos, and he showed me his sign. Later, I heard that their gig attracted somewhere between several dozen (U-T estimate) and about a hundred (estimate from a reporter).

Moving away from the tea partiers, I approached the main event and witnessed streams of folks – many in red shirts – pouring into the green east end of the Embarcadero. On the way there were small tables with mountains of water bottles and snacks being given away. Nice touch, I thought.

I also noticed there was about a dozen Harbor Patrol and City police in the vicinity. Just then, a police lieutenant walked up to me, and profusely thanked me for providing “the only information out there” about this event. That was kind of weird but I politely thanked him for that. And when I reunited with Patty who was holding our banner, she told me that one of the rally organizers had told her that the police were asking about us. “OB Rag – who are they?” It’s always good to be noticed.

Patty found a small hill just west of the main stage and planted herself and the banner. I went about taking photos and attempted to do a head count. This was very difficult as people were still moving into the park and rally area. I gave up after counting 1500.

There was a steel drum trio pounding out music, while the 4100 tiny pink flags fluttered in the wind. Two dozen students held signs with large letters proclaiming their opposition to ed cuts standing toward the crowd. I climbed up on the stage to take some more crowd shots.

Bill Freeman, head of the San Diego teachers' union.

I found Bill Freeman, head of the teachers’ union. I asked him how many people were expected, and he said 3 thousand. I then asked him why the Embarcadero had been chosen as the rally point. He replied that if it had been up to him, he would have gone for a more public site, but that CTA had chosen this particular one.

Finding Patty once again atop her hill, most of the crowd in that area were sitting on the grass. I joined them for the duration. Some OBcians joined us as well and took their positions on the green along side us.

There were a hell of a lot of people at this event. Many wore red-shirts, some light-blue ones as well. “We are one” was a favorite slogan on many of them. Many teacher groups sat together and whenever their school was mentioned from the podium, they would let out a holler. This gathering should really send a message. It was a rare occasion that this many teachers from all over the counties of Southern California were coming together.

Once the speakers started, there much applause, although only a few chants. Teachers are great, I thought, but they sure are subdued, even the many younger ones who were there. I compared them with the more militant Labor Council rally we attended back in late February, in front of the County building. But still, it was a wonderful showing overall.

Our good friend Gregg Robinson was one of the last speakers. Gregg wrote for this blog when we first began, and is known for being a good speaker. And today’s performance was not disappointing. He by far gave the most fired up speech of the rally. “Don’t let anyone tell you there’s no money for education!” he yelled out from the stage to an appreciative audience.

Gregg Robinson - at podium with arms folded - waiting to speak.

As the rally broke up, we headed back to the trolley and got on it. Our car was loaded with participants from the event all the way back east to the hinterlands. Trolley regulars looking for seats in a usually empty early evening Friday car must have freaked out. I didn’t know there was a Padres game, they probably thought.

There is a state of emergency – in education – but not just in education. It’s all over. One way to look at it, is that it’s so bad, even teachers are rallying. Teachers up and down the state were heard this week. Over two dozen were even arrested up in Sacramento, including their state union president.

Teachers have to continue to reach out, and stand with their fellow public union colleagues. We must continue to develop a genuine community-labor coalition for San Diego, and this was one more step – a giant step – in that direction.

Dutch taxpayers are up in arms over bonuses paid to Amsterdam based ING bank executives. Unlike the US, they are doing something about it. Their (unbought) politicians are proposing a 100% tax on all bonuses until the banks' bailout debts are paid back.

Yes, I'm quite aware of the taxpayer furor caused when top managers of Holland's ING bank --which received a Dutch government crisis bailout of euros 10 billion (+$14 billion) -- decided to award themselves bonuses of up to1.25 million euros ($1.8 million and within the legal limit set by the Dutch government). Such bonuses are of course a mere pittance compared to U.S. and UK top management bonuses!

This was being proposed when ING pensioners have seen their payouts frozen and while many employees were awarded a pay increase of just 1% in 2010. The public and union reactions were so fierce that within days it caused ING's CEO Jan van Hommen, awarded a 1.25 million euro bonus, to waive his bonus and to tell other directors to do the same. The normal culture here is that everyone expects banks that were bailed out by the state should be exercising modesty in this area.

Now politicians have voted legislation to implement a 100% tax on all bank bonuses paid to executives that received state aid as result of the financial crisis. This means no bonuses until the debt is repaid. Also, the union is advocating a law that makes sure executive pay NEVER amounts to more than 20 times the lowest-salaried employee. We shall see what the final vote will be, but it will be realistically fair and tough as Holland and most of Europe is not into fundamentalist market capitalism that rewards the minority and impoverishes the majority.

As I have noted before on this blog, European CEO salaries and bonuses are relatively much, much smaller compared to an average worker's wages as opposed to the correspondingly outrageous relationship of U.S. corporate top management's remuneration. The latter is driven by the culture of Shareholders & Management First and -- Workers Last , thrown survival breadcrumbs and begger benefits.

Regarding the Dutch bonus levels, Prof. Domhof in his study, Wealth, Income and Power, shows 2010 average median compensation for U.S. CEOs as follows:

All industries:....................................$3.9 million.....or 100 times median worker´s pay of $36,000

Britain has a rival when it comes to bashing bankers. After a furious row over pay packages at Amsterdam-based ING in which thousands of customers threatened to make mass withdrawals, the Netherlands is now vying for the title of Europe's most bonus-hating country.

A growing Dutch political storm could end with a blanket ban on bonuses to financiers who work for institutions bailed out by the taxpayer.

ING customers mobilised on Twitter and other social networks to protest at bonuses paid to bosses at the bank, one of the biggest in the country. The threat of direct action raised the spectre of a partial run on ING, terrifying the Dutch establishment. Fred Polhout, union organiser at the bank, says: "People were outraged. We heard about the bloated sums being paid again in the City and in New York; but suddenly the issue exploded on our own front door."

Compared with the packages awarded to bankers in the US and UK, the Dutch bonuses were small potatoes. Jan Hommen, ING's chief executive, was due to receive a £1m bonus – a pittance when you consider that Stephen Hester, head of state-controlled RBS in the UK, is in line for up to £7.7m, Bob Diamond of Barclays is to collect as much as £6.5m, and some senior bankers at Goldman Sachs and JP Morgan are looking at windfalls of about £40m each.

"Perhaps we are so upset because we are a small country that prefers to set an example, rather than follow others," suggests Polhout.

So severe was the public reaction to Hommen's bonus that within days he had agreed to waive the award and told other ING directors to do the same.

Now the Netherlands is going through a painful period of introspection and soul-searching. Politicians have voted to implement a 100% retrospective tax on all bonuses paid to executives at institutions that received state aid as a result of the financial crisis. In other words, no banker should get a bonus until the debt is cleared, and they should return payments made since 2008.

ING was thrown a €10bn (£8.7bn) lifeline to stop it going under, while ABN Amro was nationalised. Numerous other Dutch financial firms received capital support, including Aegon, SNS Reaal and ASR Nederland.

On the streets of Amsterdam, there is little sympathy for the bankers. Emma Rohl, who works at an English bookshop in the city centre, says: "They shouldn't get bonuses at all. Why should people be paid vast sums for going into work and doing their jobs? It's utterly ridiculous."

Erick Koenig at a nearby restaurant says: "We rescued the banks from their own follies, and now they expect to be paid extra. I think they should work for free for at least five years."

At a dusty office in a northern suburb of Amsterdam, Henk van der Kolk, head of the country's biggest trade union, FNV Bondgenoten, does nothing to conceal his frustration: "Everybody is angry about what happened at ING. The board isn't in tune with public opinion. What were they thinking of? ING pensioners have seen their payouts frozen, while many employees were awarded a pay increase of just 1%."

Van der Kolk's union is pushing for a law that would ensure that executive pay should never amount to more than 20 times the wage paid to the lowest-salaried employee. As for bonuses, the union feels payouts should not exceed 50% of a director's salary. Hommen's bonus was worth 92% of his €1.35m package.

"Remuneration for bankers was linked to financial machismo, which encouraged irresponsible lending. We want to get away from the bonus culture," says van der Kolk.

But given the payouts to ING directors were relatively small, some Dutch bankers are shocked they have received another public mauling.

One ING insider suggests the country was in the grip of a "typically Dutch Lutheran and Calvinist backlash" which cultivates the view that excessive wealth is somehow morally reprehensible and in contravention of traditional Dutch, Christian values. The source says: "We went through this during the boom when ministers railed against stock options and bankers were accused of exhibitionism, and enriching themselves to the detriment of the nation."

The bankers' response that high remuneration is vital to retain talent and prevent Dutch financiers from defecting to overseas banks is given short shrift by Polhout. He says: "Let them go abroad if they don't like it here; there are plenty of clever people who will take their place and work for less. Good riddance, as far as I am concerned."

Moderate opinion in Holland seems united in its belief that banks which received state aid should not be shelling out bonuses. And Dutch parliamentarians are saying the same thing, demanding the government take immediate action. ING may have made a net profit last year of more than €3bn, but it still owes the taxpayer €5bn.

The uproar against Hommen's bonuses and those earmarked for the bank's senior executives have forced ING to rethink its position. Hommen promises no more bonuses till 2012/13 when the bank expects to have repaid all state aid. In a letter to Dutch newspaper De Volkskrant, he said: "We have underestimated the signal we sent to society. [We] have [risked] renewed damage to the recovering trust of our customers."

Few doubt a critical factor behind ING's volte face was the boycott threatened by consumers.

A spokesman for the bank admitted the payment of bonuses "prompted a reaction from our customers via emails and telephone messages to our call centres". But he said only a few hundred people had actually closed their accounts.

Now the ball is in the court of finance minister Jan Kees de Jager, who must decide how to respond to a proposal by parliament calling for the return of bonuses by all executives at state-supported banks. On a recent television show, he said such a law would be difficult to implement and would hit bankers on average salaries who receive bonuses of just a few thousand euros. But in today's highly charged political atmosphere, de Jager knows that doing nothing is probably not an option.

‘Mal-employment,' a term from the '70s, has surfaced again to haunt grads

CHICAGO — Tiffany Groene is waiting tables.

Erin Crites is making lattes and iced coffees.

And Anna Holcombe is buying and selling gold.

These three Chicago women share more than just scraping by with low-paying jobs: They all have master's degrees and are unable to find work in their specialty areas.

There's even a name for their situation. They are referred to as mal-employed, a term coined in the '70s for college graduates who could not find jobs that require a degree. Instead, they settle for low-skilled jobs.

Even in rosier economic times, people with college degrees sometimes can't find jobs in their fields. But their numbers and the trend show no sign of easing during the slow and bumpy recovery from the recession.

Nationwide, about 1.94 million graduates under age 30 were mal-employed between September and January, according to data compiled by Andrew Sum, director of the Center for Labor Market Studies at Northeastern University.

Sum said mal-employment has significantly increased in the past decade, making it the biggest challenge facing college graduates today. In 2000, Sum said, about 75 percent of college graduates held a job that required a college degree. Today that's closer to 60 percent.

Uphill struggle

Though the economy is growing and new jobs are being created, Sum said, those graduating in June are not likely to see major improvements. About 1.7 million students are projected to graduate this spring with a bachelor's degree and 687,000 with a master's, according to the U.S. Department of Education.

“We are doing a great disservice by not admitting how bad it is for young people (to get a job),” Sum said.

And the longer college graduates go without working in their field, the harder it is to land interviews for jobs where they would use their degrees.

“It's hard to convince people that what I am doing is relevant,” said Groene, 27, who has tended bar and waitressed during the two years she's looked for a job related to her master's degree in public administration.

In that time, she's had one offer in her field. It came in 2009 from Chicago Public Schools but disappeared before she could start, due to budget cuts. Desperate, she took a job as a bartender. She said she quit six months later, upset by the sexual advances of bar patrons.

With no income, she moved back to her father's house in Rockford, Ill. At times, she found it difficult to leave her bedroom because she felt depressed.

She said she wasn't used to not succeeding. An avid soccer player, Groene was drafted to go to college and drafted again to become an assistant coach at Columbus State University in Georgia, where she earned her master's degree.

“You feel so down,” Groene said.

With the support of her family, she ventured out again last month and took a job as a waitress in Chicago. She said it's the best job she's had in two years. She also slowed down her job search and is back in school pursuing a master's in education.

“I can't find anything anyway,” she said, adding that more schooling allows her to start from scratch.

Experts say Groene's situation is hardly unique. When everything else fails, graduates are more likely to go back for more education. Those with a bachelor's sign up for a master's, and so on. Some take a step back, either to look for new opportunities or retool their fields of interest.

Bill White, for example, is pursuing a second bachelor's degree. He looked for a job for about six months before graduating in December with a master's in public relations and advertising. Unable to land one, the 28-year-old has shifted his focus to mechanical engineering.

While college graduates are still more likely to land a job than those without degrees, the fact that so many are not finding jobs in their fields has raised questions about the payoff of a college education.

Since he got his bachelor's degree last May, Kirk Devezin II has worked full-time a little more than six months and has freelanced. He has never made more than the $10.36 an hour he earned as a barista at Starbucks when he was a student at Eastern Connecticut State University.

“I apply to jobs constantly, constantly, constantly,” he said.

He has interviewed for positions related to his communications degree, but lately, all the interviews have been for barista and cook jobs, and one at a carwash. Sensing that employers in low-wage industries might think he is overqualified, he has left his college degree off the applications.

“It just seems like it was just a big waste of time,” said Devezin, 24, who still lives in Connecticut. “And I'm $20,000 in debt.”

The numbers show that he's wrong — experts say earning a college degree is still the best way to avoid unemployment.

Smaller value, but still value

“The value of the degree is still there; it is just not returning as much in investment as it would a few years ago,” said Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers University.

In fact, those who land a job in their field do well, but those who are mal-employed earn just slightly more than high school graduates, according to Sum's research. For example, the mean wage for those mal-employed is $476 a week, while those with a job that requires a degree earn $761. By comparison, a high school graduate earns $433.

Erin Crites, 27, makes $10.55 an hour as a barista at a coffee shop in downtown Chicago. She is struggling to pay her bills and has considered cutting her health insurance — a situation she was hoping to avoid by earning a master's degree.

Crites graduated in June from Dell'Arte International, a theater school based in California. She sought a master's degree in ensemble-based physical theater, figuring that such a specialized degree would make it easier for her to land a job. But Crites graduated as schools cut back art programs and arts-based nonprofits struggled to secure grants.

“You can get as close as you can to work solely as an artist without a source of secondary income ... but it's almost impossible,” she said.

Still, Crites is determined to make it in her field. As long as she keeps her passion, she will find a way in, she said.

Though barely getting by, Crites is lucky. Nationwide, there were about 2 million unemployed people older than 25 with at least a bachelor's degree — nearly 1.3 million more than in March 2007, according to the U.S. Labor Department.

On a small plaza near the DePaul University College of Law, a group of students about to graduate were socializing when a reporter approached. Most said they didn't expect to land a law-related job. One student said he was told by a potential employer that there was no reason to hire him when the firm could hire an experienced lawyer for the same salary.

That situation is becoming more commonplace.

Anna Holcombe, who has a master's degree in public relations and advertising, said she's often competing for jobs against people who only have bachelor's degrees or are willing to work for free just to get their foot in the door.

“It's a struggle,” she said, adding that at age 31 she doesn't have the luxury of being able to work for free. She has responsibilities, including bills due at the end of the month.

Until she gets a position in her field, Holcombe is holding on to her job as a sales associate at a retail store. She got the job to pay bills while at school, never thinking it would be so difficult to let it go.

May 13, 2011

Importance of Progressives Rallying in Support of Teachers Is Heightened

This Friday the 13th of May, over 2000 teachers, students, parents and local labor activists are rallying down at the Embarcadero from 4 to 6, in what’s being called a State of Emergency Rally.

Now, it turns out the San Diego’s right-wing, in the form of the Koch brothers’ sponsored Americans for Prosperity, conservative activists from the Republican right and local tea parties will be counter-demonstrating at the same place and roughly the same time.

In a declaration they call “Stop The Teachers Union and Tax Increases This Friday“, they declare:

The California Teachers Association and their Union friends are ONCE AGAIN using “the children” in their plot to raise taxes before reforming pensions and government waste. At a rally this week in Sacramento their rally cry is for more income and gas taxes with the mantra of the spending problem is “California isn’t spending enough”.

Tell the Teacher’s Unions Enough is Enough!

Lorena Gonzalez, head of the San Diego Labor Council says:

I want to encourage everyone to come out and show our support for our union brothers and sisters who work in the schools, and the need for a budget with revenues. Please keep it classy and peaceful.

So, it’s more important than ever to show up for this event. Support the teachers and all public and private union members.

On Wednesday, ConocoPhillips CEO Jim Mulva outraged many on Capitol Hill when he released a statement calling it “un-American” to end subsidies to the Big 5 oil companies — ExxonMobil, BP, Shell, Chevron, and ConocoPhillips. A press release referencing the subsidies posted on the company’s website was headlined: “ConocoPhillips Highlights Solid Results and Raises Concerns Over Un-American Tax Proposals at Annual Meeting of Shareholders.”

This position is a stark reversal from what Mulva said just a few years ago. In 2005, he testified that he agreed with President Bush’s assessment that with “$55 oil, we do not need incentives to oil and gas companies to explore.” Mulva testified, “With respect to oil and gas exploration and production, we do not need incentives.” But with oil prices now hovering around $100 per barrel, Mulva has inexplicably changed his tune.

Yesterday Sen. Robert Menendez (D-NJ) called Mulva’s “un-American” statement “truly outrageous” and said he expected Mulva to apologize. At today’s Senate Finance Committee hearing with the oil CEOs, Sen. Chuck Schumer (D-NY) repeatedly pressed Mulva for an apology, but the ConocoPhillips CEO refused to give one, claiming “nothing was intended personally” by his press release. Schumer then pressed the other oil CEOs to state their views:

SCHUMER: I want to ask you a specific question, do you think anyone who advocates cutting these subsidies is un-American? Yes or no, sir. That one we deserve a yes or no answer on, it was your release that said “un-American.” Yes or no?

MULVA: Senator, maybe you can hear me out on this because it’s a very important question.

SCHUMER: Do you apologize for it?

MULVA: Make no mistake, were these proposals enacted…they would place U.S. oil companies like our company…

SCHUMER: Sir, I have limited time. I know your view. Do you consider it American to have another view? Yes or no?

MULVA: Senator, I believe policies under consideration are going to have a very adverse impact with respect to energy policy.

SCHUMER: There are many people who disagree with that. … Do any of you others consider it un-American to be against the subsidiy that you’re for? If you do, raise your hand?

[No one raises their hand.]

SCHUMER: Alright, thank you I appreciate the other four of you not labeling those who are different from you un-American.

Remarkably, after Schumer wrapped up his questioning, Sen. Pat Roberts (R-KS) rushed to Mulva’s defense and echoed his claim that it was “un-American” to end tax breaks for big oil companies. “Now, I’d call that sort of un-American — sorry, Chuck.” Watch it:

Democrats demanded the CEOs explain why they need special tax breaks when gas prices are above $4 a gallon in much of the country and their companies are raking in record profits. Earlier this week, Democrats in both the House and Senate unveiled legislation that would close the tax loophole for the top 5 oil companies — who collectively made $36 billion in the first quarter alone — and use the money to pay down the deficit. Senate Majority Leader Harry Reid (D-NV) has scheduled a vote for next week on a bill that would repeal $21 billion in oil subsidies over the next 10 years.

Ex-Shell CEO John Hofmeister recently told the National Journal, “In the face of sustained high oil prices it was not an issue — for large companies — of needing the subsidies to entice us into looking for and producing more oil.”

Update During his subsequent questioning, Senator Bob Menendez (D-NJ) also tried to get Mulva to recant. Menendez was the senator who originally called the CEO out for his offensive remarks and demanded an apology. Mulva again refused to take back the statement or apologize. Menendez summed up, “So the bottom line is you're unwilling to apologize for a company's statement. Okay, so I'll continue to take offense to it.” Watch it:

One of the more staggering developments to emerge in the aftermath of Osama bin Laden’s elimination has been the attempt by many on the right to shoehorn George W. Bush into the narrative of how the terrorist mastermind behind 9/11 was successfully tracked down and ultimately killed. Soon after Obama’s announcement of Bin Laden’s death, House Majority Whip Eric Cantor (R-VA) attempted to spin the accomplishment as a continuance of Bush’s “vigilance,” Sarah Palin thanked the former president without even mentioning Obama, the news shows on the Sunday following the event featured no less than five former Bush administration officials (versus only two from the Obama administration), and Bush himself reportedly declined an invitation to a commemorative ceremony at the World Trade Center because he reportedly felt like he did not receive enough credit for Bin Laden’s death.

But attributing Bin laden’s death to “vigilance” on Bush’s part is a stretch (to put it kindly) as an analysis and a timeline by ThinkProgress demonstrate. Bush’s missteps included not focusing on Bin Laden prior to 9/11, undermining the search for Bin Laden by abandoning the fight in Tora Bora, and above all, by shifting resources away from a focus on al Qaeda and into the massive folly that was the invasion of Iraq. Watch a ThinkProgress video documenting Bush’s failures:

One of my regrets in life is losing the chance to debate Mitt Romney and whip his ass.

It was the fall of 2002. Mitt had thundered into Massachusetts with enough money to grab the Republican nomination for governor. Meanwhile, I was doing my best to secure the Democratic nomination. One week before the Democratic primary I was tied in the polls with the state treasurer, according to the Boston Herald, well ahead of four other candidates. But my campaign ran out of cash. Despite pleas from my campaign manager, I didn’t want to put a second mortgage on the family home. The rest is history: The state treasurer got the nomination, I never got to debate Mitt, and Mitt won the election.

With Trump, Gingrich, Bachmann, and possibly Palin now in the race for the Republican presidential nomination, “GOP” is starting to mean Goofy, Outrageous, and Peculiar. Mitt would pose the most serious challenge to a second Obama term.

I say this not because Mitt’s mind is the sharpest of the likely contenders (Gingrich is far more nimble intellectually). Nor because his record of public service is particularly impressive (Tim Pawlenty took his governorship seriously while Mitt as governor seemed more intent on burnishing his Republican credentials outside Massachusetts). Nor because Mitt is the most experienced at running a business (Donald Trump has managed a giant company while Mitt made his money buying and selling companies.) Nor, finally, because he’s especially charismatic or entertaining (Sarah Palin can work up audiences and Mike Huckabee is genuinely funny and folksy, while Mitt delivers a speech so laboriously he seems to be driving a large truck).

Mitt Romney’s great strength is he looks, sounds, and acts presidential.

Policy wonks like me want to believe the public pays most attention to candidates’ platforms and policy positions. Again and again we’re proven wrong. Unless a candidate is way out of the mainstream (Barry Goldwater and George McGovern come to mind), the public tends to vote for the person who makes them feel safest at a visceral level, who reassures them he’ll take best care of the country – not because of what he says but because of how he says it.

In this regard, looks matter. Taller candidates almost always win over shorter ones (meaning even if I’d whipped him in a debate, Romney would probably still have won the governorship). Good-looking ones with great smiles garner more votes than those who scowl or perspire (Kennedy versus Nixon), thin ones are elected over fat ones (William Howard Taft to the contrary notwithstanding), and the bald need not apply (would Eisenhower have made it if Stevenson had been blessed with a thick shock?).

And behavior matters. Voters prefer candidates who appear even-tempered and comfortable with themselves (this was Obama’s strongest advantage over John McCain in 2008). They also favor the candidate who projects the most confidence and optimism (think FDR, Reagan, and Bill Clinton).

Romney has it all. Plus a strong jaw, gleaming white teeth, and perfect posture. No other Republican hopeful comes close.

What does Mitt stand for? It’s a mystery — other than a smaller government is good and the Obama administration is bad. Of all the Republican hopefuls, Romney has most assiduously avoided taking positions. He’s written two books but I challenge anyone to find a clear policy in either. Both books are so hedged, conditioned, boring and bland that once you put them down you can’t pick them up.

Mitt is reputed to say whatever an audience wants to hear, but that’s not quite right. In reality he says nothing, but does it in such way audiences believe they’ve heard what they want to hear. He is the chameleon candidate. To call Mitt Romney an empty suit is an insult to suits.

Yet Romney is gaining ground over Obama. According to the most recent Marist poll, in a hypothetical presidential matchup Obama now holds a one percent point lead over Romney, 46 to 45. In January, Obama led Romney by 13 points.

Why is Mitt doing so well? Partly because Obama’s positions are by now well known, while voters can project anything they want on to Mitt. It’s also because much of the public continues to worry about the economy, jobs, and the price of gas at the pump, and they inevitably blame the President.

But I suspect something else is at work here, too. To many voters, President Obama sounds and acts presidential but he doesn’t look it. Mitt Romney is the perfect candidate for people uncomfortable that their president is black. Mitt is their great white hope.

The real battle for the soul of the GOP started today with a speech on Wall Street by Speaker of the House John Boehner.

Wall Street and big business fear Tea Partiers won’t allow House Republicans to raise the debt ceiling without major spending cuts – and without tax increases on the wealthy. Wall Street and big business know this would be unacceptable to the White House and congressional Democrats.

The Street and big business want to tame the budget deficit but they don’t want to play games with the debt ceiling. Credit markets are fine at the moment, but if the debt ceiling isn’t not raised within the month – weeks before August 2, when the Treasury predicts the nation will run out of money to pay its creditors and its other bills – credit markets could go into free fall. The full faith and credit of the United States would be jeopardized. Interest rates would skyrocket. The dollar could plummet.

The Tea Partiers don’t care about the debt ceiling. To them, it’s a giant bargaining chit to shrink government. Nor do they worry about credit markets. If the full faith and credit of the U.S. government is no longer honored, so much the better.

You see, Tea Partiers hate government more than they hate the national debt. They refuse to reduce that debt with tax increases, even with tax increases on the wealthy, because a tax increase doesn’t reduce the size of government. The Tea Partiers’ real aim is to shrink the government.

But the Street and big business dislike the national debt more than they dislike government. And they wouldn’t even mind a small tax increase on wealthy people like themselves in order to cinch a deal on raising the national debt. They have so much money they’d scarcely notice.

In truth, government has been good to Wall Street and big business. It bailed out the Street. It saved GM, Chrysler, and AIG. And most government spending improves the profits of big businesses – military contractors, big agriculture, giant health-care insurers, Big Pharma, large construction companies.

Tea Partiers have almost as much contempt for big business and the Street as they do for government. After all, the Tea Party was born in anger over the Wall Street bailout.

This is the heart of the civil war in the GOP.

House Speaker John Boehner, appearing today at the Economic Club of New York, tried to placate both wings, but he was far more in the Tea Party camp than with his audience. He said “everything is on the table” in order to reduce the nation’s debt – a bow to Wall Street and big business pragmatists. But in the next breath he ruled out tax increases.

Boehner says he won’t allow the U.S. to default on its obligations – exactly what the Street wants to hear. But then he insists on tying the debt-ceiling vote to a deficit-reduction deal. “The cuts should be greater than the accompanying increase in debt authority the president has given. We should be talking about cuts of trillions, not just millions.”

Boehner knows the only way to get cuts of this magnitude without increasing taxes on the rich (or cutting defense — something else the GOP wouldn’t think of) is to make mincemeat out of Medicare and Medicaid, slash education and infrastructure, and kill off most of everything else people of moderate means depend on.

In other words, Boehner’s conditions are just another version of the Paul Ryan plan House Republicans approved last month – the same plan that brought howls at recent Republican town meetings. Democrats will never agree to it, nor should they. Nor will the rest of America.

And that means no agreement to increase the debt ceiling.

Boehner is siding with the Tea Partiers. Wall Street and big business hold the purse strings in the GOP but the Tea Partiers are now the ground troops. Boehner and his GOP colleagues figure Wall Street and big business will stake them in any event. They need Tea Partiers to get out the vote in 2012. And they’re afraid angry Tea Partiers will get out the vote against them in their own primaries.

But Boehner is playing with fire. If the debt ceiling isn’t raised and the financial system begins to collapse, the GOP loses not only Wall Street and big business. It loses everyone who’s still sane.

Wow, am I perspicacious or what? Three days ago I blogged that, despite Cheney's and Rumsfeld's assertions to the contrary, torture played no role in the capture of bin Laden. Since President Obama and his spokemen initially left the door open by not categorically stating that torture played no role, Cheney and Rumsfeld were all over the TV last weekend claiming that torture played a major role thus giving themselves and the Bush administration some backdoor credit. Here's what I said:

Cheney and Rumsfeld were all over last Sunday's TV talk shows trying to eke out an iota of credit for the Bush administration in the capture and killing of bin Laden by way of talking about how the torture they espoused played a role in locating him. It was a pathetic attempt to exonerate themselves and at the same time claim a share of the credit. The fact of the matter is that waterboarding played no role in the killing of bin Laden whatsoever and all the credit should go to the Obama administration. However, Obama administration spokesmen will not come flat out and say that. Instead, they want to leave the door open to give Bush some kind of credit by saying that bits and pieces of the puzzle were gleaned from a variety of sources. Obama has bent over backward not to criticize Bush and his henchmen. What he should have done in my opinion was to come right out and say, "Torture played no role in the capture of bin Laden." But he is too nice a guy so he leaves the door open for Cheney and Rumsfeld to grasp at straws in an effort to vindicate their lack of competence.

I actually had no proof that torture "played no role in the killing of bin Laden whatsoever." It was just a hunch. But wonder of wonders, yesterday none other than one of Cheney's and Rumsfeld's REPUBLICAN colleagues, Senator John McCain, came on the TV and stated categorically that "torture played no role in the capture of bin Laden," thus making fools out of Cheney, Rumsfeld and Bush. I blame Obama to some extent for not stating that categorically at the outset. Instead, Obama, hesitant to criticze Bush and his henchmen, left the door open for them to create a false impression in the American public. Obama and his administration should have taken full credit for the killing of bin Laden while at the same time slamming the door shut on the efficacy of torture and denouncing it. Instead he gave the Bushies and the righties an opening which they were overeager to take him up on. This, evidently, was just too much for the maverick, John McCain, who was tortured himself in Vietnam. Even though he ran against Obama in the last election, McCain came forward to essentially denounce Cheney and Rumsfeld for being the fools that they are and for trying to give themselves a modicum of credit for bin Laden's capture.

This is an unprecedented blow to the right wing who will grasp at straws to denounce or to not give credit to Obama and instead will lie in order to credit Bush and other Republican incompetents and clap traps. How good it feels to have the record set straight in this instance! And let this be a lesson to Obama. Don't not tell the whole truth in order to give your ideological opponents a little credit when they deserve none. Obama is too nice a guy, and he's up against a bunch of cutthroats. When he's totally and completely in the right and they're totally in the wrong, he need not go out of his way to give them some of the credit. One of his spokemen on last Sunday's talk shows repeatedly danced around the question, "Did torture play any role in the killing of bin Laden?" He repeatedly refused to give a "yes" or "no" answer and instead implied that it might have. So when Cheney and Rumsfeld jumped at the opportunity to state that torture did play a role thereby giving themselves and Bush a heapin' helpin' of credit, I guess this was too much for McCain, CIA Director Leon Panetta and perhaps even Obama himself. To my total amazement it was a fellow Republican who called them out and made total liars and fools out of them.

Cheney and Rumsfeld, apologists for Bush, were trying to rewrite history. Instead they only served to make Bush look like a bigger fool than he already appears to be. This is one for the history books. The information about the courier which led to bin Laden's capture and killing was gleaned from a foreign source, McCain stated, and was obtained by conventional interrogation methods not "enhanced interrogation techniques," a pseudonym for torture.

John McCain to Bush apologists: Stop lying about Bin Laden and torture

By Greg Sargent, June 12, 2011

This is getting really good. As noted below, John McCain in an Op ed this morning skewered the claim that the killing of Bin Laden vindicates torture. But just now, on the Senate floor, he uncorked a new broadside that is quite remarkable, taking direct aim at Bush apologists who are reviving this debate in order to claim Bin Laden’s death as part of the Bush legacy.

McCain amplified his case, and called on former Bush attorney general Michael Mukasey — whose recent op ed claiming torture led to Bin Laden has been widely cited by the right — to retract his claims. McCain’s speech is worth quoting at length:

“With so much misinformation being fed into such an essential public debate as this one, I asked the Director of Central Intelligence, Leon Panetta, for the facts. And I received the following information:

“The trail to bin Laden did not begin with a disclosure from Khalid Sheikh Mohammed, who was waterboarded 183 times. We did not first learn from Khalid Sheikh Mohammed the real name of bin Laden’s courier, or his alias, Abu Ahmed al-Kuwaiti — the man who ultimately enabled us to find bin Laden. The first mention of the name Abu Ahmed al-Kuwaiti, as well as a description of him as an important member of Al-Qaeda, came from a detainee held in another country. The United States did not conduct this detainee’s interrogation, nor did we render him to that country for the purpose of interrogation. We did not learn Abu Ahmed’s real name or alias as a result of waterboarding or any ‘enhanced interrogation technique’ used on a detainee in U.S. custody. None of the three detainees who were waterboarded provided Abu Ahmed’s real name, his whereabouts, or an accurate description of his role in Al-Qaeda.

“In fact, not only did the use of ‘enhanced interrogation techniques’ on Khalid Sheikh Mohammed not provide us with key leads on bin Laden’s courier, Abu Ahmed; it actually produced false and misleading information. Khalid Sheikh Mohammed specifically told his interrogators that Abu Ahmed had moved to Peshawar, got married, and ceased his role as an Al-Qaeda facilitator — which was not true, as we now know. All we learned about Abu Ahmed al-Kuwaiti through the use of waterboarding and other ‘enhanced interrogation techniques’ against Khalid Sheik Mohammed was the confirmation of the already known fact that the courier existed and used an alias.

“I have sought further information from the staff of the Senate Intelligence Committee, and they confirm for me that, in fact, the best intelligence gained from a CIA detainee — information describing Abu Ahmed al-Kuwaiti’s real role in Al-Qaeda and his true relationship to Osama bin Laden — was obtained through standard, non-coercive means, not through any ‘enhanced interrogation technique.’

“In short, it was not torture or cruel, inhuman, and degrading treatment of detainees that got us the major leads that ultimately enabled our intelligence community to find Osama bin Laden. I hope former Attorney General Mukasey will correct his misstatement. It’s important that he do so because we are again engaged in this important debate, with much at stake for America’s security and reputation. Each side should make its own case, but do so without making up its own facts.

This is taking on the makings of an old-fashioned, barn-burning senatorial crusade, and it’s unclear if anyone of McCain’s stature is going to step up and make the pro-torture case. For all his flaws, McCain carries great authority on this issue because of his own past experiences.

It’s becoming clearer that despite the Obama administration’s desire to avoid relitigating the torture debate, this is precisely the time to do it. The emerging evidence is on the side of torture opponents: A careful and extensive New York Times investigation concluded that torture “played a small role at most” in tracking down Bin Laden. Beyond this, the larger dynamic is perfect: The president that has been widely derided by the right as weak for ending torture tracked down and killed the world’s most wanted terrorist. That’s a pretty strong starting point for this argument.

Republican Senators are apparently set to grill David Petraeus and Leon Panetta at their confirmation hearings over torture’s role in getting Bin Laden. So in addition to McCain’s increasingly high profile on the issue, we may soon see the popular Petraeus reiterating his opposition to torture in a high-visibility setting — after the Obama administration killed America’s number one terrorist foe. Gettin’ mighty interesting.

Investing in renewables to the extent needed would cost only about 1% of global GDP annually, said Rajendra Pachauri, chairman of the IPCC.

Renewable energy is already growing fast – of the 300 gigawatts of new electricity generation capacity added globally between 2008 and 2009, about 140GW came from renewable sources, such as wind and solar power, according to the report.

The investment that will be needed to meet the greenhouse gas emissions targets demanded by scientists is likely to amount to about $5trn in the next decade, rising to $7trn from 2021 to 2030.

Ramon Pichs, co-chair of one of the key IPCC working groups, said: "The report shows that it is not the availability of [renewable] resources but the public policies that will either expand or constrain renewable energy development over the coming decades. Developing countries have an important stake in the future – this is where most of the 1.4 billion people without access to electricity live yet also where some of the best conditions exist for renewable energy deployment."

Sven Teske, renewable energy director at Greenpeace International, and a lead author of the report, said: "This is an invitation to governments to initiate a radical overhaul of their policies and place renewable energy centre stage. On the run up to the next major climate conference, COP17 in South Africa in December, the onus is clearly on governments to step up to the mark."

He added: "The IPCC report shows overwhelming scientific evidence that renewable energy can also meet the growing demand of developing countries, where over 2 billion people lack access to basic energy services and can do so at a more cost-competitive and faster rate than conventional energy sources. Governments have to kick start the energy revolution by implementing renewable energy laws across the globe."

Although the authors are optimistic about the future of renewable energy, they note that many forms of the technology are still more expensive than fossil fuels, and find that the production of renewable energy will have to increase by as much as 20 times in order to avoid dangerous levels of global warming. Renewables will play a greater role than either nuclear or carbon capture and storage by 2050, the scientists predict.

Investing in renewables can also help poor countries to develop, particularly where large numbers of people lack access to an electricity grid.

About 13% of the world's energy came from renewable sources in 2008, a proportion likely to have risen as countries have built up their capacity since then, with China leading the investment surge, particularly in wind energy. But by far the greatest source of renewable energy used globally at present is burning biomass (about 10% of the total global energy supply), which is problematic because it can cause deforestation, leads to deposits of soot that accelerate global warming, and cooking fires cause indoor air pollution that harms health.

There was disappointment for enthusiasts of marine energy, however, as the report found that wave and tidal power were "unlikely to significantly contribute to global energy supply before 2020". Wind power, by contrast, met about 2% of global electricity demand in 2009, and could increase to more than 20% by 2050.

As with all IPCC reports, the summary for policymakers – the synopsis of the report that will be presented to governments and is likely to impact renewable energy policy – had to be agreed line by line and word by word unanimously by all countries. This was done at Monday's meeting in Abu Dhabi. This makes the process lengthy, but means that afterwards no government or scientist represented can say that they disagree with the finished findings, which the IPCC sees as a key strength of its operations.

Books

Doug Ramsey: Take Five: The Public and Private Lives of Paul DesmondThis is a great book! Paul Desmond and Dave Brubeck formed the heart of one of the best all time jazz groups. Paul was the quintessential intellectual, white jazz musician. A talented writer, he never published anything. However author, Doug Ramsey has collected Paul's letters here. How ironic that now his writing in the form of letters to his father and ex-wife, among others, is finally published showing another window on the mind of this talented person.
A sideman, for the most part, his entire life, the Dave Brubeck Quartet might never have happened at all due to the fact that Paul had managed to offend Dave to the point where he never wanted to see him again. It had to do with a gig that Paul actually was the leader of. Paul wanted to take the summer off to play another gig, and Dave wanted Paul to let him take over the gig at the Band Box in Palo Alto, CA. Paul wouldn't let him and Dave, married with two children, proceeded to starve.
Due to an elaborate publicity campaign, when he realized the error of his ways, Paul managed to worm himself back into Dave's good graces. The rest is history.
This book is remarkable for the insight it gives into a working jazz musician's mind, wonderful pictures and interviews with the significant figures in Paul's life. Author Ramsey, not a remarkable penman himself, has nevertheless done a magnificent job of assembling all these various materials. Unlike a lot of jazz authors, he doesn't overly idolize his subject with the result that you get the feeling that you have met a real person and not a idealized version. That's high praise indeed for any biographer. (*****)